GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES

Intro Golden Nuggets
* Chinese Yuan Maturity Process
* Gold Exchange Vacant Vaults
* Allocated Gold Account Scandal
* Disorder in Gold World
* Gold Price in Suspended Animation
* European Despair & Deterioration
* Ugly USEconomy Snapshot


HAT TRICK LETTER
Issue #111
Jim Willie CB, 
“the Golden Jackass”
19 June 2013

QUOTES ON GOLD

"We intensely analyze the Gold & Silver market, and we think both will hit new highs at the end of the year or early next year. The shocking thing to me is, obviously, most governments now have put into place legislation or rules in their banking systems for bail-ins. The fact that all these countries are doing this means [it is] going to happen. That is the ultimate win for precious metals. God knows what the price would be if it turns some of those depositors into people who need to own Gold & Silver. Somebody is going to fail here. All the data I look at says the Western central banks [which] have been selling gold, are running on fumes now. It is very close at hand." ~ Eric Sprott

"With regard to the Indian Government's campaign to curtail gold buying by the Indian public, India is as democratic a country as any and the problem is rooted in the preferences of the people. This is like trying to stop Americans from watching football." ~ John Brimelow

"Large investors who are keeping their gold in the COMEX, especially in JPMorgan's vault, now understand how corrupted the physical market is, especially at the COMEX. There is a motivated run on the gold JPM is holding in its Eligible account by investors who want to make sure they get their bars. In other words, we may be seeing final stages leading up to an eventual COMEX default. It might not be an outright default. They may juggle the balls, so to speak, in order to give the illusion that there was not a default. But we think the COMEX may be on its last legs." ~ Dave in Denver

"Many investors have incompatible goals and perspectives. The COMEX will shut down as an empty room, if the official corrupt Gold price is forced lower, since devoid of inventory and clients. The lack of  inventory demands another price ambush. The COMEX must be shut down in order to permit a fair Gold market to emerge as dominant. My forecast call for over two years has been that the official Gold price goes dark, with only scattered global prices quotes appearing, a full requisite step in the market's discredit process. The benefits come to the other side since those quotes will emerge from the new fair equitable decentralized market." ~ the Jackass

"I don't know why one just doesn't trade gold for the Friday fall. It is so predictable, it has become comical." ~ Marshall Auerbach (referring to illicit big bank paper market whacks on Fridays when low volumes make it vulnerable)

"Demand is unprecedented. We are buying all the coin blanks they can make." ~ Richard Peterson (acting Director of the USMint)

## INTRO GOLDEN NUGGETS

◄$$$ ON JUNE 15TH OF 1933 THE INFAMOUS USGOVT CONFISCATION OF PRIVATE GOLD WAS CONDUCTED BY PRESIDENT FRANKLIN ROOSEVELT. THE JACKASS HOPES THE USGOVT TRIES THE STUNT AGAIN. IT WOULD REVEAL THE VALUE OF GOLD, ITS SAVIOR ROLE BY THE BANKING SYSTEM. THE EFFORT COULD BRING DOWN THE USGOVT FINANCIAL SECTOR. $$$

Franklin Delano Roosevelt was a man of average intellect, weak spine, deceptive word, and vastly over-rated legacy. Apart from his very unimpressed war record (pre-war Pearl Harbor, post-war Yalta Conference), Roosevelt enjoyed broad bipartisan support for inflationary policies in Congress. The nation was desperate. After 101 days in office, he ordered the surprise confiscation of private holdings in gold coins, bullion, and certificates. Roosevelt called the measure a temporary maneuver to restore national solvency, but he lied. He followed up the seizure by invalidating gold clauses in private contracts that obligated payment in gold dollars, which resulted in a sweeping paper asset devaluation for bond assets and related contract holders. The USGovt under FDR betrayed citizens who had purchased gold as a hedge against the inflationary boom of the 1920s, called by literary icons the Roaring Twenties. Some crafty Americans stored their gold successfully in Canada. It was just the asset inflation insanity of that era. Another meddlesome practice of the FDR Admin was its frequent intrusive interventions in wages and prices (without precedent) which caused a normal stock market correction to evolve into a depression.

By January 1934, just six months later, Roosevelt increased the dollar price of gold by order from $20.67 to $35.0 per ounce. The fiat order in effect devalued the USDollar by 70% while increasing the value of Gold held from the seizures. The banking system was restored, on the back of citizen wealth, a massive organized theft. Roosevelt's popular programs created the foundation for socialism (the monster that continues to grow), not exactly a great item on his career record either. His infrastructure programs were very constructive though, as they permitted the USEconomy to enjoy enormous growth. Any attempt by the USGovt to confiscate gold again from private citizens will erupt into a grand firestorm, even rebellion. If it is attempted out of desperation, the move would breathe vigorous life into the Gold price to create a dragon. People would suddenly switch lanes, and comprehend that gold is the answer to the national insolvency that grips banks, households, businesses, and the government itself.

◄$$$ BULLION BANK OPERATORS COULD BE SHUT DOWN FROM LACK OF INSURANCE. THEIR INSURANCE FIRMS ARE ASKING TOUGH QUESTIONS. IF THEY LOSE INSURANCE, THEY WILL NOT BE ABLE TO CONTINUE. $$$

Amidst all the hubbub and publicity over Allocated Gold Account fraud, a minor element to the business equation has been ignored. The issue arose a few years ago when Morgan Stanley faced lawsuit pressures over gold vault charges for gold bars long before leased and sold. Service fees for stored non-existent gold bars is fraud. Likewise, the criminal activity of bullion banks has crossed the insurance contracts. Insuring gold that is gone complicates the details in verification of insurance contracts. Imagine insuring a Mercedes in a garage where it was stolen months earlier. Furthermore, the insurance companies might be on the verge of doubling their policy premium costs to the bullion banks, since they smell fraud themselves. They are not stupid. With some legally enabled inspections and audits, they can determine the missing gold amounts. They follow up by calculating the value of missing gold bars in the $billions, then amplify the losses by estimated lawsuit awards. The biggest hidden problem for bullion banks is not redemption, but insurance. Without it, they shut down.

◄$$$ THE TORONTO STOCK MARKET WILL SELL GOLD & SILVER. A PLOY IS LIKELY. THE CANADIAN MINE OUTPUT FACES A DIVERSION FROM THE PRIVATE GOLD DEMAND. A PHONY SCAM IS AT WORK, SINCE THE CANADIAN GOVT HAS NO GOLD RESERVES. THE ORIGIN OF THE SUSPICIOUS VEHICLE IS TIMED WITH THE REVELATION OF LOST GOLD AT THEIR MINT, PROBABLY DUE TO DISCOVERY OF SALTED TUNGSTEN BARS (FAKE GOLD). $$$

The Canadian Govt has begun to sell Gold & Silver on the Toronto stock market, just another paper scam. The Royal Canadian Mint has issued two Exchange Traded Receipts, one representing a weight of gold, the other a weight of silver. They will therefore mimic an Exchange Traded Fund. The two vehicles curiously trade for less than the market value of the precious metals they represent. The giveaway on the con is the stark evidence that Canadian Govt reserves are empty of gold, long ago played for benefit to the Wall Street crooks to curry favor. See the Globe & Mail article (CLICK HERE).

Rob Kirby filled in some blanks, critical neglected items. The Exhange Traded Receipts were created by the Royal Canadian Mint in the aftermath of their losing C$15 million worth of gold back in 2009. The timing was exact. At the time, they suddenly found no working stock to feed their robust Maple coin program at the mint. The lost gold was attributed to lost floor scraps at the foundry, an absurd story. The number of ounces at the time equated to forty separate 400-oz bars, by coincidence the exact number of bars that are routinely melted to do a run of feedstock Gold Canadian Maple coins. Kirby is confident that the RCMint tried to melt borrowed tungsten-salted (fake gold) bars they unknowingly stored for a third party. They were forced to write off the loss, when the tungsten bars did not melt properly. Tungsten requires an order of magnitude higher melting temperature than gold.

Kirby said, "The RCM had to borrow third party gold in situ, because Canada had sold all 660 metric tonnes of their sovereign reserves during the late 1980s and early 1990s. It was pretty much in the immediate aftermath of this reported loss that the RCM established their ETReceipt [ploy] to ensure that going forward, they always had adequate working stock of Gold & Silver bullion to continue manufacture of both Gold and Silver Maples. Do not believe in coincidences, as there are too many associated with this story. Therefore, betting on the RCM and their gold or silver ETRs might come with some dubious risk." He recommends instead the Sprott or CEF funds, which he assures have real bullion without question.

◄$$$ US-MONEY GROWTH CONTINUES TO RISE AT A TORRID PACE. IT IS TOTALLY OUT OF CONTROL. THE SPURTS COINCIDE WITH HIGH VOLUME BOND PURCHASE AND REDEMPTION PROGRAMS. MONEY GROWTH EXCEEDS A 40% ANNUAL PACE. $$$

Monetary solutions never repair structural damage, especially with deep systemic insolvency. Notice the quantum leaps upward in the adjusted monetary aggregate. The 2008-2009 spurt was in response to the Lehman Brother killjob collapse. The 2011 spurt was with the introduction of QE bond purchases by the USFed. The 2013 spurt in progress is QE3 without limits (aka QE to Infinity). Desperation is setting in. The USFed reaction to a faint false response by the USEconomy is to ramp up the volume of money growth, and more dangerously, to talk about the tapering of the QE bond purchase programs with a gradual rise in interest rates. They are liars. They will continue to ramp up bond monetization when foreign channels accelerate in volume the USTBonds returned to sender as toxic swill in redemption. Expect a frightening rise by next year, when foreign channels redeem USTBonds and the USFed will be compelled to cash them in for whatever currency is demanded, or else face a monster rise in the long-term USTreasury Bond yields. The other consequence of the foreign redemption channel stuffing will be an unwanted massive expansion of the USFed balance sheet, precisely when they will be talking about its reduction.

Some money supply data points are provided by the St Louis Fed. With $3.173 trillion on May 29th, against $2.986 on April 4th, the growth of $187 billion in eight weeks resulted in a 40.7% annual growth rate. Growth in money supply should be locked in stride with USEconomic growth. It was until 1996, when Greenspan changed the rules and opened the floodgates to asset bubbles and their consequent ruin.

◄$$$ SERIOUS INFLATION HAS BECOME ENTRENCHED IN VENEZUELA, FOLLOWING TWO LARGE DOSES OF CURRENCY DEVALUATION IN THE LAST FEW MONTHS.

The Central Bank of Venezuela has reported an inflation rate for May of 6.9%, equivalent to an annualized compounded rate of around 100%. It would be a stretch to claim the nation is on the verge of a hyper-inflation episode. However, if more currency devaluation befalls the Bolivar currency, then such an episode could occur. The nation is in the midst of a harsh adjustment to account for almost two decades of currency controls. Be on watch for another quantum drop in the currency. The Jackass forecast is for another devaluation to the Bolivar currency, to come in 2014 when it is clear that the new Venezuelan Govt has continued the Chavez policies, not reformed them. See the Economic Monitor article (CLICK HERE).

◄$$$ THE EURASIAN TRADE ZONE CONTINUES APACE WITH PROGRESS. THE EASTERN POWERS WILL PUSH THE ENVELOPE. THE WEST CONTINUES TO BE LOCKED OUT, ITS ROLE HAVING CHANGED TO DISRUPT PROGRESS RATHER THAN TO JOIN IT. MANY ARE THE PIPELINES AND NATIONS AS PIECES AND PLAYERS. ANOTHER EURASIAN TRADE ZONE BUILDING BLOCK IS BEING CONSTRUCTED IN BELARUS. SIMILAR ENTERPRISE EFFORTS ARE OCCURRING IN GREECE. $$$

For an excellent review of the plans, progress, and development of the New Silk Road, see the Asian Times article (CLICK HERE) by Pepe Escobar. He colorfully describes the evolution of the Eastern Hemisphere, with all its progress, uniting efforts by the various nations, and the obstruction presented by the West, led by the United States. He calls the many new pipelines the odd moniker of Pipelineistan. Their development explains a motive why Syria might be in the process of being destroyed. The Jackass has given the natural gas pipeline going from Iran to Syria the name Shiite Pipeline, thus the target for its derailing. The most significant partnership is clearly between Russia & China, the axis for the Eurasian Trade Zone itself. Volumes could be filled with the progress, developments, and events behind the Eurasian build-out. This brief story is a summary of miniscule length.

Some key turning points are in progress of development. The New Economic Axis is being built, which could eventually place the Euro currency over the USDollar. A significant strategic economic and political development is at work, not covered in the least by the Western press, probably since it is terminally negative to the USDollar. The latest odd event is taking place in the Western suburb of the Former Soviet Union. China is building an entire city in the forests near the Belarusian capital of Minsk. Its design is to create a manufacturing site for exploit between the European Union and Russia. The area is 40% larger than Manhattan, located around the Minsk international airport. Overall the project calls for $5 billion in development, which will include enough housing to accommodate 155 thousand people, according to Chinese and Belarusian officials. The small Belarus Economy has a $60 billion GDP, but has required a $6.5 billion in bailouts from the Intl Monetary Fund and Russia since 2009. The hub will put Chinese exporters within 170 miles of EU members Poland and Lithuania and give them tax-free entry into Russia and Kazakhstan, which share a customs union. The local Belarus population is 99.6% literate but with half the wages of Poland. The industrial park is unique in Europe. See the Bloomberg article (CLICK HERE). Be sure to know that China is also building a city of industry in Idaho, in the Western United States.

◄$$$ LLOYDS WILL CLOSE ITS DUBAI PRIVATE BANKING BUSINESS. BANK BUSTS ARE HAPPENING ALL OVER, BUT MOST VISIBLY IN AN UNUSUAL PLACE. UNITED ARAB EMIRATES IS SEEING A MASSIVE WAVE OF BANK EXECUTIVE RESIGNATIONS. THE WAVE HAS REACHED THE SAUDIS, THE BRITISH, AND SPANISH BANKS ALSO, EVEN AUSTRIA. $$$

Lloyds of London will shut down its private banking business in Dubai. See the Arabian Business article (CLICK HERE). They are not alone. The British and Americans are not very popular in the Middle East after a full generation of brutal dominance and support for a common Arab enemy, the staunch US ally in the Middle East that controls most US foreign policy with hidden strings. A mass of multiple bank executives have departed from UAE banks in the fastest pace seen in modern times. The writing is on the wall, time to go. The Jackass belief is that the House of Saud is soon to fall, and bankers sense the growing risk and danger to the entire Gulf region. Within a short period of time, numerous bank CEOs and senior executives have resigned in the UAE. The unusual factoid is that many had been in their positions for only a short tenure, but have left suddenly. It is a low pressure zone. In March, the head of Mideast and Africa operations based in Dubai resigned at Royal Bank of Scotland. In April, a skein of departures. NBAD lost their veteran CEO Michael Tomalin after 14 years of service. He will continue as non-executive director to support the transition to the new CEO, who will come from ANZ Bank. Ajman Bank lost its CEO in January 2012 but the acting CEO suddenly quit. The largest bank from UAE, EmiratesNBD lost its CEO after seven years at the post. The month of May saw more departures. ADIB lost its CEO Stuart Crocker of Private Bank, who had just joined the firm in 2012. Barclays lost its top Middle East banker. The CEO-elect at RAK Bank resigned after coming from Lloyds Bank, a stay of only 45 days.

The phenomenon (like missing bee population) is also occurring in many other countries such as Spain, the United Kingdom, Saudi Arabia, and Austria, among other countries. In Austria, Raiffeisen Bank Intl CEO Herbert Stepic resigned in the wake of damaging publicity over his personal property deals. In Saudi, the top JPMorgan banker who was heading the Regional Corporate Bank left. In Spain, the Santander CEO quit, due to past criminal conviction. At Barclays in London City, both the head of Private bank and the Head of Investment Bank quit on the same day in April. In Cyprus, plenty of damage to executive ranks. The largest bank on the copper isle, Bank of Cyprus lost its CEO and also lost its Chairman, two people. The entire Laiki Bank (aka Popular Bank), the second largest on Cyprus, was rendered insolvent and shut down. All accounts in excess of EUR 100 thousand were confiscated, lost, stolen, seized. The CEO and entire staff were dismissed, the total jobs lost near 9000. The Jackass suspects bankers are on the run, fully aware that international police are conducting investigations in depth with enforcement power, from a new sheriff in town. This view is independent of events on Cyprus, and very much connected to the forcible removal of 6000 tons from London banks in the spring and summer months of 2012, taken to satisfy margin calls to secure Eastern locations. Add to these factors the instability of the Persian Gulf, centered in the eventual fall of the House of Saud.

◄$$$ WORD SLOWLY COMING OUT THAT SAUDI KING ABDULLAH IS CLINICALLY DEAD. INTERNALLY, THE KINGDOM IS IN DISARRAY. THE STABILITY OF THE DESERT REALM IS GONE WITH A FART IN THE DESERT. SUCCESSION IN SAUDI ARABIA IS IN PROGRESS BUT FROM A CLUMSY SECRETIVE SEQUENCE. THE INSTABILITY SHOULD LEAD TO THE DISCARD OF THE PETRO-DOLLAR, FROM FAILURE TO HOLD TOGETHER THE GROUPS IN CONFLICT LIKE REFORMERS AND THOSE WHO WISH NO MORE TIES WITH AMERICAN (INFIDEL) INTERESTS. $$$

Finally reports are being disseminated from credible local channels that Saudi Arabia's King Abdullah bin Abdulaziz is clinically dead. The monarch has not been seen in public for a couple months. Earlier in 2013, the Hat Trick Letter reported that King Abdullah had not emerged from back surgery and its anesthesia. A Saudi journalist working for London-based Asharq Alawsat claimed the king was clinically dead. He quoted medical sources in Saudi Arabia as saying that the king's vital organs, including his heart, kidneys, and lungs, have stopped functioning. Sustained by a defibrillator and ventilator, he hangs on sadly. Abdullah is a smart honorable devoted man. The Royal Court has yet to comment on the report of King's death. They probably will only when they decide which among the unimpressive insecure gang of inbred poorly educated weakling gnomes will succeed to the throne. Be skeptical that the crown prince is the lock to the throne. See the Al Monitor article (CLICK HERE) and the PressTV article (CLICK HERE). With Abdullah will go the nation's stability. Within a minimum of 12 months, and a maximum of 2 years, expect the fall of the House of Saud. With it will go the crucial Petro-Dollar defacto standard. The lost USDollar foundation will usher in the new age of Gold.

◄$$$ COPPER WITHDRAWAL ORDERS FROM LONDON METALS EXCHANGE HAVE SOARED TO A RECORD. THE CHINESE COPPER FINANCING DEAL IS COMING TO AN ABRUPT END, COMPLETE WITH METAL SHORTAGE. $$$

A significant story is emerging in the metals market, not in Gold or Silver, but rather in copper. Bloomberg chose to apply deceptive spin by claiming the fast falling copper inventory at the London Metals Exchange is evidence of improving global demand. Bull cookies and poppycock, rubbish and bullocks too. An unprecedented rise in orders to withdraw copper has a suspicious hand from China, as part of its own strange copper deal. The huge demand bias from Asia suggests far more is at play than economic resurgence. Point the finger at the collapse in the Chinese Copper Financing Deal (CFFD), a funding system based upon rehypothecation. It featured obscure unlimited collateral capacity tied to funding chains. An inadequate amount of copper in bonded warehouses exists to meet the Letter of Credit needs, once the copper warrants start being demanded. Some analysts believe the surge in LME delivery requests reflects a desperate demand for physical copper for to meet these unwinding spurious funding deals. Recall that just before the mid-April orchestrated illicit gold market crash, the copper vaults had gone almost empty. See the Zero Hedge article (CLICK HERE). Expect a copper market default or a staged futures contract naked short ambush, the all too common paper attack. Given the broad need for copper (cars, homes, electronics), a paper ambush will probably be impossible.

◄$$$ THE CHINESE WILL BE WORKING ON ANOTHER CENTRAL AMERICAN CANAL THAT LINKS THE TWO MAJOR OCEANS. THE STORY IS THAT NICARAGUA IN THE NEXT DECADE WILL JOIN PANAMA IN CANAL SERVICE BETWEEN THE TWO GREAT OCEANS. BOTH WOULD BE UNDER CHINESE CONTROL. EXPECT A LESS THAN EASY ENGINEERING FEASIBILITY REPORT ON THE PROJECT, DUE TO LONGER DISTANCE AND NO RAIN FOREST WATER SUPPLY. $$$

As a resident of Central America for 6-1/2 year, the Jackass offers an informed interpretation of the potential second canal story. Two visits to the Panama Canal in recent years, including the fascinating Canal Museum, and additional reading have given a solid perspective. The Panama Canal took many years and cost many lives to construct. It spans a very narrow isthmus stretching 48 miles (=77km) between the Pacific and Atlantic Oceans. Part of the span is helped by Lake Miraflores, whose three mile length reduced the construction effort.

Nicaragua has awarded a Chinese company a 100-year concession to build an alternative to the Panama Canal. Its completion would surely have profound geopolitical ramifications. However, not so fast. The other canal in Nicaragua would be much more difficult to construct for two big reasons. The first is simple distance. The Pacific leg would be about 12 miles (=18km) to connect to Lake Nicaragua. The Atlantic leg would be about 60 miles (=100km) to connect through the plains to the east. The total distance would be about 72 miles, a 50% longer span than Panama. The second is weather. A key ingredient to the lock system in Panama is the rain forest contribution, a natural supply to the network. Nicaragua is NOT a rain forest, but rather a very hot plain with a few volcanos that seem out of place. It is hot as hell, sunny on 90% of days, and not very humid. The Jackass loves the sunny hot weather, often scorching hot, a welcome break from the seven straight rainy season months of Costa Rica. Rain is not a regular feature in the plains of Nicaragua. But the lake at certain times of the year has swarms of flying insects so heavy that they are mistaken for clouds. They once found my nostrils in large numbers. See the UK Guardian article (CLICK HERE).

Not so fast on this new ambitious project. The shortest route is shown with the thick black lines on the map. The Chinese have covered their bets well, having pledged this month a hefty $500 million to upgrade all of Costa Rica's port facilities, with their own imported Chinese chain gang labor. Besides, the Chinese already control the Panama Canal with a CISCO contract. My guess is by the end of 2014, nothing will have been done for the Nicaraguan Canal, after the engineering feasibility study is completed.

## CHINESE YUAN MATURITY PROCESS

◄$$$ MOBIUS OF FRANKLIN TEMPLETON EXPECTS A GOLD-BACKED ASIAN CURRENCY TO BE LAUNCHED. OF COURSE! $$$

The Boom Bust Blog included a ripe email. A reference was made to the BBBlog having cited Philippa Malmgren, who claimed the Chinese might back their currency with gold. The reader had a chance to speak with Mark Mobius from Franklin Templeton Investments. He mentioned during a presentation that people in Asia had been guying gold like crazy, after the gold price fell in April. He talked about dealers in India being sold out. He cited colleagues from Turkey who saw sales in Turkey of massive amounts of gold coins as well, done at big premiums to the spot price. It suggests a decoupling of the price of physical gold from the spot price on COMEX. On the matter of the Chinese backing their currency with gold, Mobius was directly asked after the presentation, "Do you believe we will see an Asian nation back their currency with Gold?" His answer was "Yes, of course." Then the follow-up question, "Do you think we will see a return to the Gold Standard?" His answer was, "Yes, we should." Mobius is extremely knowledeable about Asian economies in Asia. See the Boom Bust Blog account (CLICK HERE).

◄$$$ MAJOR INSIDER CLAIMS IT IS TIME TO BUY GOLD, SINCE THE CHINESE WANT TO GIVE THE YUAN CURRENCY A GOLD BACKING. AN INDICATION IS GIVEN OF A COORDINATED GOLD PRICE SUPPRESSION. $$$

Philippa Malmgren is an veritable insider. She was Special Assistant to the President for Economic Policy on the National Economic Council in the United States Govt. She was also a member of the President's Working Group on Financial Markets (aka the Plunge Protection Team). Her client list includes every elite corporate firm in the world. In her recent commentary on Gold, she implies a conspiracy underway to push the gold price down. See the Economic Policy Journal article (CLICK HERE).

◄$$$ A GOLD-BACKED CHINA YUAN IS TO ARRIVE SHORTLY. THE FULLY CONVERTIBLE  YUAN IS NECESSARY, STEPS TAKEN EVERY MONTH. GOLD ACCUMULATION IS REQUIRED, SURELY HIDDEN FROM VIEW. THE MANY YUAN SWAP FACILITIES IN PLACE WILL AID THE CONVERSION PROCESS IN TRADE. THE UNITED STATES WILL SOON LOSE THE GLOBAL RESERVE CURRENCY STATUS FOR THE USDOLLAR. THE IMPACT WILL BE ON PRICE INFLATION INSIDE THE USECONOMY, AND RETURNED USTREASURY BONDS FROM FOREIGN BANKING SYSTEMS. THE USTBOND WILL NO LONGER BE BROADLY USED IN BANKING RESERVE SYSTEMS. A SHOCK WAVE WILL HIT THE AMERICAN SHORES, RESULTING IN GREAT DISRUPTIONS, AS CHINA ASSUMES THE LEAD GLOBAL ROLE. $$$

China is making all the required moves to convert to a gold-backed Yuan currency. It will change the world of finance and banking. It will disrupt the sovereign bond markets, rendering them exposed congames that support tainted fiat paper currency. The USDollar is in deep danger of being replaced as the primary reserve currency used globally. China is no longer content with a seat at the table, or worse, a chair in the hallway outside the conference room. Indications are clear that China actually plans to replace the United States as the dominant economic world power. In fact, China already accounts for more global trade than the United States does. The world is slowly preparing for a gold-backed Yuan currency, or at least the Eastern nations are making preparations. The result will be disruptions to the East but some degree of catastrophe to the West. China is in the cat bird seat. They hold roughly $1 trillion in USGovt debt. They use the USDollar in international trade more than any nation except the United States. Until now, China has been compelled to use the USDollar in international trade for lack of an attractive alternative. But a Gold-backed Yuan would change all of that very rapidly. Afterwards, the global banking systems would review their USTreasury Bond emphasis in reserves management, then diversify out of them. Yet another channel to discharge USTBonds.

Motive and support are fast arriving for more Yuan usage in global trade. Beijing leaders pursue respect as well as power, and Yuan adoption is more than just about economics. They are working toward its full convertibility and internationalization by year 2015. Expect it to arrive sooner, born of crisis. John McCormick of Royal Bank of Scotland stated, "Financial crises in the US and Europe mean the world needs a new more stable global reserve currency. Trade in RMB (renminbi=yuan) is growing rapidly. In the FX market, for example, our figures show that volumes are now worth around USD 5 to 6 billion daily, double what they were a year ago. China's new leadership faces a number of problems. The country's economy is slowing and, although we would expect the rate of GDP growth to pick up a little, it is unlikely to be a steep rebound. But promoting RMB as a global reserve currency, with all the economic benefits that will bring in addition to exerting more political influence on the global stage, clearly remains high on their agenda."

The Wall Street Journal recently discussed how Beijing is undertaking a long gradual campaign to establish the Yuan as a more market oriented, international currency. Their State Council (cabinet) reiterated the plan to make the Yuan currency fully convertible. The Western media comments not at all on the convertibility of the Chinese Yuan, which is a very important step. Until recently, the Yuan was only directly convertible into USDollars and JapYen. Changes come quickly. Just this year, the Chinese Govt has entered into currency convertibility agreements with Australia and New Zealand. The numerous Yuan Swap Facility devices are a precursor to direct convertibility, currently in force with at least a dozen other nations including England, Russia, and Singapore. The nation France is working to secure the swap facility also.

These nations no longer blindly favor the USDollar. The US has lost its leadership, following crises and corruption. The Western central banks strain to maintain credibility. The USDollar is soon to be cut out of the trade settlement process in a sequence of steps that the majority of Americans and analysts ignore. The adoption of Gold-backing for the Yuan currency would push the process into overdrive, resulting in the replacement of the USDollar as the global reserve currency. Persistent rumors point to China busily preparing for a Gold-backed Yuan in its foundation. Their gold reserves are five to ten times larger than reported officially. Implications to banking reserves management are immediate, as diversification out of USTBonds would follow rapidly from expedience and avoided reserve losses. With little trade settled in USD, the banks of the world would not require their USTBonds to serve as foundation reserves. Ergo. sell USTBonds!

The Economic Policy Journal recently reported that Pippa Malmgren claims China plans to convert the Yuan into a hard gold-backed currency, in her words. She is the President and founder of Principalis Asset Mgmt. She once worked in the White House in the Bush II Admin. In the new era of rapidly depreciating sovereign bond foundations to paper currencies, the conversion would mark a distinct competitive edge and cause a rapid Paradigm Shift. The Chinese have set themselves apart as the biggest buyers of gold, mainly off-market. They acquired the majority of the 6000 metric tons extracted by coercion from London last summer. China also imported over 223 tons of gold in the month of March, through the Hong Kong window. That is an extraordinary number, but is eclipsed by other non-standard avenues. Overall, Chinese imports of gold from Hong Kong tripled in 2012, and the final number for 2013 will vastly overwhelm what was seen in 2012. Something big is brewing, and the West is asleep before the financial section of the newspaper, focused instead on US stocks and US sports. The massive gold hoarding by Chinese leaders is prelude to substantially raising the international influence of the Yuan. The USDollar is soon to be isolated, rejected, and devalued.

As the clock speeds up, China could soon be the largest gold holder in the world, at between 7000 and 10,000 metric tons. They are probably superceded only by Russia, where the Kremlin stores a gigantic supply likely two to three times greater than Fort Knox ever held before its pilferage. My source indicates that Russia owns over 20,000 tons of gold bullion, safely stored under the Kremlin in cavernous vaults. China is only one or two moves away from checkmate of the USDollar, with Russia kibbitzing. Their hands are moving on the chessboard. Putin is a master chess player. As footnote, recall that China is the biggest gold mine producer in the world.

If China finalizes the Gold-backed Yuan currency, and no longer uses the USDollar in international trade, the world will follow, starting with major Eastern nations (likely including Japan), and later major European nations (likely starting with Germany). The result will have devastating effects on the USEconomy. The exchange rate for the USDollar would fall hard. The demand for USGovt debt would vanish, already just a mere trickle, obscured by the heavy USFed monetized demand. The impact would translate to sudden US-based price inflation from import channels applied to finished products and commodities both, as well as supply shortages. The entire American way of life would be transformed to Third World standards, as the Jackass has forecasted for over four full years. The advantage of the USDollar being the primary world reserve currency has been a primary advantage, soon lost. No longer will the US be able to import everything inexpensively. The loss of world reserve status means a massive tsunami of currency in the form of USTreasury Bonds coming back to the US shores for redemption. The adjustment in the US standard of living will (not would) cause economic disorder and social chaos. Few realize that the majority of USDollar currency is actually used outside of the United States. The catastrophe awaits. See the Economic Collapse article (CLICK HERE).

◄$$$ THE CHINESE CONTINUE WITH STRONG GOLD IMPORTS FROM HONG KONG. THE SURGE IN MARCH WAS UNUSUAL. THE FLOW CONTINUES APACE, EACH MONTH EXCEEDING THE SAME MONTH A YEAR AGO. RECORD VOLUMES ARE BEING SET. $$$

Chinese mainland buyers in March purchased 126,135 kilograms of gold from Hong Kong, including scrap, compared with 223,519 kilograms. Net imports after deducting flows from China into Hong Kong were 75,891 kilograms, versus 130,038 kilograms a month earlier. Despite being lower than the March total, the April volume of imports at 126.1 tons was the second highest ever, certainly greater than April 2012, a fact missed by the tilted Western press. No slump here, just a more relaxed heavy consumption. See the Zero Hedge article (CLICK HERE).

◄$$$ THE BANK OF FRANCE IS SEEKING A YUAN LIQUIDITY AGREEMENT FOR THE EUROZONE. THE FACILITY COULD BE MORE BROAD THAN A SIMPLE YUAN SWAP FACILITY FOR USAGE BY NUMEROUS CENTRAL BANKS IN EUROPE. IT IS CALLED FULL LIQUIDITY SUPPORT. PARIS WANTS TO COMPETE IN THE FINANCIAL SECTOR, AND NOT BE LEFT OUT. $$$

The Bank of France Governor Christian Noyer announced the nation is seeking agreement among EuzoZone central banks for ways of providing broad liquidity support in Chinese Yuan currency. They wish to compete for future business against both London, Zurich, and Hong Kong banks. Noyer said, "The essential thing is liquidity backstops, either public or private ones. On the public facility, we are looking at it. We are talking about how we can have a public backstop with a swap accord in the Euro system. We have been working with the Hong Kong authorities, the Chinese banks. The system is now being put in place. The Chinese banks are very interested and the big international banks too."

Paris must compete as the ugly little sister against London and Zurich to become any reasonably contending player in Yuan trading in Europe. The trade winds have China elevating its currency for more wide usage across the world. A swap arrangement would allow central banks to supply Yuan funds to commercial banks, whose customers require the currency. The Bank of England announced in February that it planned to sign a deal soon on a three-year currency swap arrangement. See the Bloomberg article (CLICK HERE).

◄$$$ THE KIWI DOLLAR AND CHINESE YUAN HAVE STRENGTHENED TIES. THE DIRECT CONVERSION IS MORE THAN A SWAP FACILITY. THEIR BILATERAL TRADE WILL BE SETTLED IN YUAN DIRECTLY, RESULTING IN LOWER TRADE COSTS, AND BETTER OVERHEAD RISK MANAGEMENT. MORE GRIST FOR THE USDOLLAR MILL OF PHASE-OUT DEMISE. AMAZINGLY, NEW ZEALAND HAS MORE TRADE WITH CHINA THAN WITH AUSTRALIA. $$$

In late May, New Zealand and China were in talks to make their currencies directly convertible. The benefit of reduced costs is immediate, while trade between the two countries is targeted to surge 33% in the next two years. The negotiations are in early stages, with progress cited, but without a specific timeframe. The pact was initiated by New Zealand Prime Minister John Key on a recent trip to Beijing. On a national level, exports from New Zealand to China jumped 32% in 1Q2013, surpassing shipments to Australia for the first time. The main items shipped were dairy products, raw lumber (logs), and meat. The currency talks are underway as New Zealand has targeted NZ$20 billion (=US$16.2 bn) in two-way annual trade with China by 2015, compared to NZ$15.2 billion in the year ended March. Cost reduction is direct. The transaction costs would come down when doing business with China. It reduces the cost of hedging as well as eliminating the impact of currency moves in opposite directions. It also enables competitive pricing. These advantages were pointed out by Jane Turner, economist at ASB Bank in Auckland. See the Bloomberg article (CLICK HERE).

◄$$$ CHINA URGENTLY NEEDS A NEW FINANCIAL SYSTEM. ITS LINKAGE TO THE USDOLLAR SYSTEM A CHOKING INFLUENCE, FROM THE DEBT AND TOXIC CURRENCY FOUNDATION. EXCEPT FOR A HUGE SURPLUS AND MASSIVE RESERVES, IT RESEMBLES THE UNITED STATES AS AN EXTENSION. YET IT MUST DEPART AND ADOPT A NEW VIABLE SYSTEM. $$$

Fitch has called the China credit bubble unprecedented in modern world history. Well, they overlook the United States, which is an order of magnitude worse and far more corrupt with grand war machine appendages like a ball & chain. The Chinese shadow banking system is out of control, under mounting stress as borrowers struggle to roll over short-term debts. The scale of credit is extreme. Growth is inhibited. The growth model based on credit engines is falling apart. The risk is for massive over-capacity to be realized. No transparency exists in the shadow banking system, and systemic risk is rising. The identity of borrowers and lenders plagues the system. The quality of assets is unknown. Lending is effectively masked as trusts, wealth management funds, offshore vehicles, and other forms of irregular lending make up over half of all new credit. Bad assets are routinely off-loaded. Exposure to property risk does not appear as property on the bank accounting. Concerns are rising after a string of upsets in trust products, a $1.4 trillion segment of the shadow banking system. Fitch warned that wealth products worth $2 trillion in loans are actually a hidden second balance sheet for banks, allowing them to circumvent loan curbs and thus evade regulatory limitations. This niche is the epicentre of risk. Half the loans must be rolled over every three months, and another quarter in less than six months. The similarities to Northern Rock, Lehman Brothers, and other Western firms are stark, which resulted in failures from short-term liabilities when the wholesale capital markets froze.

The Chinese banks do have over $3 trillion in reserves parked at the central bank, giving them a massive savings account that can be drawn down during resolution of the credit crisis, once it erupts in full bloom. Overall credit has risen sharply from $9 trillion to $23 trillion since the Lehman crisis in late 2008 Amazingly, the entire US commercial banking system has been replicated in five years. The Chinese ratio of credit to GDP has jumped by 75 percentage points to 200% of GDP. During the same timespan, the US ratio has risen about 40% versus GDP. Extreme concern has hit China on its financial foundation. It must reform, restructure, and adopt a new system. The Gold Trade Standard seems viable. It is coming soon. See the UK Telegraph article (CLICK HERE).

## GOLD EXCHANGE VACANT VAULTS

◄$$$ THE STUNNING DRAINAGE OF JPMORGAN GOLD IS A JOY TO WATCH. THEY ARE PRONE AND BLEEDING AT THE MORGUE. AN ACCELERATION OF GOLD BAR REMOVAL IN HIGH GEAR FROM THE JPMORGAN VAULTS IS IN PROGRESS, WHICH INCLUDES CLIENT ACCOUNTS. THEY DISTRUST THE BANK, CLEARLY. PREPARE TO CELEBRATE THE COMPLETE DRAINAGE OF JPMORGAN. $$$

Among the many important COMEX participants, the biggest US bank has been withdrawing enormous amounts of gold from warehouses. JPMorguen stands out among the rest, its behavior far different, sticking out like a giant festering thumb. The graph shows the JPM discharge of gold bars between December 2012 and June 2013. Its fellow members display no such similar drainage. Thanks to the Real Asset folks for great charts.

The withdrawals are courtesy of both the JPMorgan House account and JPM Client account. Their House account saw heavy depletion in February, March, and April. Their Client account saw heavy depletion in the four months from April through June, with growing volume. The suspicious clients appear to have followed the JPM lead in deed. March resulted in 2.3 metric tons in exit, while June had grown to reach 4.7 metric tons in exit. The trend is worsening, a sign of vanishing trust by its own client base, who frequently sue the big bank in court. One intrepretation is that JPMorgan clients have been handing over gold in heavy volume in meeting delivery needs for four months in a row. The Jackass does not buy that story. It is more like their clients have been removing it from the greedy corrupt clutches of JPM hands, removing it from the JPM vault altogether for safe keeping. The distrust of the JPM crime center is becoming well known.

◄$$$ THE JMPORGUEN GOLD INVENTORY HAS GONE DANGEROUSLY LOW, HAVING DONE A FAST VANISHING ACT. THE JUNE 11-th REMOVAL WAS OVER 60% ON A SINGLE DAY. ANOTHER COUPLE MONTHS WITH THIS PATTERN, AND JPMORGUEN WILL BE OUT OF GOLD. $$$

Overnight withdrawals continue in relentless pace. Record low inventory has gone hand in hand with rapid withdrawals by distrusting parties. The JPMorguen criminality is coming into full view and wide recognition, with lawsuits and court settlements frequent. More demand for JPM vaulted gold is occurring than the firm has in its possession. Daily vault depository statistics released by COMEX are the source of frequent shocks, none greater than on June 11th. The Morgue parted that day with another 28.4% of all of its vaulted gold, the largest one day withdrawal since April 25th. The breakdown includes the departure of 61.5% of its Eligible gold, an amount equal to 218k troy oz. The total gold held by JPM has fallen to a new record low of just 550k ounces, down from 768k the day before. Worse, hundreds of thousands of registered gold ounces in the bast few weeks have seen warrant detachment, a prelude for removal. The run on the JPM vault shows no sign of letting up. At the current depletion rate, the world's biggest gold vault, located in South Manhattan next to the Fed's own gold vault, will be empty in under two months. It cannot happen soon enough. Bury them and let the world move on.

The drainage is stunning. JPMorgan Client gold inventory fell 61% overnight on June 11th alone. Their official Eligible (Customer) gold inventory fell by a whopping 6.7 metric tons of gold taken off the listed inventory. Only 136,380 ounces of gold remains in the JPM official customer inventory. A mere four metric tons of gold is left in its Eligible Client inventory. The 217,844 oz withdrawn from the JPMorgan vault accounted for 28% of its total inventory, which means JPMorgan only has approximately 555,000 oz left in its total inventory. The figures require extra stress to reflect the extra distress. See the Silver Doctors article (CLICK HERE) with a table.

◄$$$  HARVEY ORGAN PAINTED A SHOCKING PICTURE FOR THE C.O.M.E.X. AS BEING ALMOST OUT OF GOLD IN INVENTORY. HIS INTEGRITY IS EXCELLENT. ANOTHER EVENT IS COMING, AS THE BACKGROUND SCREAMS FOR IT. $$$

The daily weblog of Harvey Organ is a rolling website on content (CLICK HERE). A snapshot after trading on June 17th paints a frightening picture. The Dealer Inventory is extremely low for the three major bullion banks at Scotia, HSBC, and JPMorgan. It totals 30.08 tons of gold bullion, in no way adequate to meet delivery requirements at the COMEX in the next few months.

a)      Scotia: at 285,596.23 oz, equal to 8.88 tons (a slight increase from Friday the 14th)

b)     HSBC: at 270,197.277 oz, equal to 8.4 tons

c)      JPMorgan: at 413,526 oz, equal to 12.8 tons

d)     Brinks dealer account has the biggest share of the dealer gold at 445,398.58 oz, equal to 13.89 tons.

Organ has a keen ability to summarize well, pointing to the critical problems. He states the problem as three-fold:

1)      The total dealer inventory of gold is at a very dangerously low level of only 44.32 tons, and none of the 9.5 tons linked to delivery notices from May and the 30 tons from June have been removed from inventory yet. That leaves under 5.0 tons after May and June are processed.

2)      part A: JPMorgan's customer inventory remains extremely low at 136,380 oz. Those customers of JPMorgan who have gold in its vault might best remove it before another fiasco like MFGlobal occurs. They are forewarned.

3)      Part B: JPMorgan's dealer account rests at 413,000 oz. However, all of this gold is committed, plus an additional 81,000 oz.

4)      The three major bullion banks have collectively only 30.08 tonnes of gold left!!

◄$$$ THE AGGREGATE C.O.M.E.X. DATA IS SUSPECT, AS DISCLAIMERS OPEN THE DOOR FOR BIG DOUBT, EVEN RIPE SUSPICION. EXPOSURE OF THEIR FRAUDULENT DATA IS COMING INTO THE OPEN. CLIENTS WHO HOLD GOLD IN THE EXCHANGE RUN THE RISK OF HAVING THEIR GOLD BARS REHYPOTHECATED. EVEN CLIENTS WHO RECENTLY HAVE TAKEN DELIVERY UNDER CONTRACT, BUT NOT TAKEN POSSESSION, COULD HAVE THEIR GOLD BARS SNATCHED UNDER THE SAME ROOF WHERE THEY STORE IN THE C.O.M.E.X. VAULTS. $$$

The official disclaimer by the once venerable JPMorgan on the COMEX data speaks volumes. "The information in this account statement is taken from sources believed to be reliable; however, JPMorgan Chase & Co disclaims all liability whatsoever with regard to its accuracy or completeness. This account statement is produced for information purposes only." Sounds like they are stating their data is a lie, but a lie that absolves them from legal liability. The attorneys for the CME/Comex have covered their crooked asses by adding the statement to their daily gold and silver warehouse stock reports. It is a new addition, which did not recently appear on their warehouse stock report a week before. So conclude the COMEX data has been published as false, with a legal rejoinder probably included by legal counselors.

The COMEX vault operators lease out a substantial portion of the Gold & Silver bars kept in both the Registered and Eligible account designations.  It would be easy income for JPMorgan, a bullion bank who actively engages in gold leasing, to lease out the majority of the bars it stores. After all, for any given delivery month, less than 2% of the Open Interest ever stands for delivery. Extra income would be easy. The suspicion has been raised that the disclaimer has suddenly appeared, put on the warehouse reports, after a large amount of gold bars have been physically removed from COMEX vaults. The attention should be drawn specifically to the JPMorgan Eligible account, since the beginning of the year. Therefore, highly likely that a significant portion of the remaining Gold & Silver sitting in COMEX precious metals vaults has been been hypothecated in some form, used as collateral snatched easily. The practice is surely illegal, if JPMorgan clients were to read the fine print of vault contracts. Precedent has been set by MF-Global and the illegal hypothecation of customer assets. The common link is JPMorgan, the gigantic crime syndicate bank which controls the legal processes as well. They are moving from grabs of previously sacred client brokerage accounts to COMEX Client accounts. Later come the run of the mill bank accounts.

To make matters even worse, no COMEX warehouse rules require vault operators to establish Allocated (separated, untouchable, owned) accounts for the individual customers. They intentionally make no boundaries, enabling thefts. This pertains to storage and guarantee requirements. It is like intermingling children college funds with the household accounts for general spending purposes. Those customers who have taken delivery of Gold or Silver bars from the COMEX under contract might have chosen to safekeep them in the same COMEX vault. They easily vanish. To be sure, insurance is required. If and when a rush occurs by vault customers to take physical possession of their owned gold bars, it is highly likely not to be there any longer. A slip of paper might be left behind, a notice about the disclaimer. See the Truth In Gold articles (CLICK HERE and HERE).

◄$$$ SILVER STOCKS AT THE SHANGHAI EXCHANGE HAVE DECLINED SUBSTANTIALLY SINCE THE APRIL PRICE TAKE-DOWN. THE CORRUPT C.O.M.E.X. AND S.L.V. REPORT NO DECLINE AT ALL, A GRAND LIE. A GLOBAL SILVER SHORTAGE HAS ARRIVED. $$$

An interesting trend is taking place in the silver warehouse stocks at the Shanghai Futures Exchange over the past two months. The Exchange started trading silver futures in May 2012. From the onset until the beginning of 2013, silver warehouse stocks grew from virtually nothing to nearly 1000 metric tons. In seven weeks, 357 metric tonnes of silver have been removed from Shanghai at the exchange, resulting in a 32% decline of warehouse stocks. Either industrial demand has picked up significantly, or investors in China are capitalizing on the lower price of silver. Given the global economy is in decline, the conclusion is simple. The Chinese are gobbling up silver at discount prices. Notice the silver inventories are declining on the Shanghai Futures Exchange while COMEX levels have remained about the same (165 million oz) since the silver price ambush in April. Again, the COMEX data is a big ugly bold lie with disclaimers attached. See the Silver Doctors article (CLICK HERE).

◄$$$ SHANGHAI FUTURES EXCHANGE VOLUMES ARE SURGING, AS THEIR AFTER HOURS TRADING WILL BEGIN THIS SUMMER. CONTRACT TRADES IN GOLD & SILVER ARE TO TO KICK OFF ON JULY FOURTH, TO MARK A CERTAIN DEGREE OF INCREASED INDEPENDENCE FOR THE GOLD MARKET GOING FORWARD. $$$

The Shanghai Futures Exchange (SHFE) will begin after-hours trading for its Gold & Silver contracts on July 5th, as part of its efforts to become a more global marketplace. The significance of Independence Day (July Fourth) in the United States is not lost. The SHFE is the country's biggest commodity exchange by contract value. Its contracts pertain to copper, aluminium, zinc, lead, natural rubber, fuel oil, and steel, in addition to precious metals. It is also preparing to launch contracts soon in crude oil futures. The COMEX/LBMA death watch continues. See the Reuters article (CLICK HERE)

◄$$$ EXCEPT FOR INDIA AND HONG KONG, PREMIUMS REMAIN STRONG FOR RETAIL GOLD SALES AS VOLUMES HAVE SURGED ACROSS ASIA. SHORTAGES ARE REPORTED ACROSS INDIA, WHERE THE ENTIRE SUPPLY CHAIN IS IN DELAY WHILE SMUGGLING ROUTES ARE BETTER CREATED. $$$

Singapore, Shanghai, Dubai, and Turkey continue to see high premiums for gold sales across Asia. On the last day in May, the overnight volume for the cash contract at the Shanghai Gold Exchange surged 55% to 15.64 metric tons, from a two-week low of 10.09 metric tons on May 27th. That is very significant. In Singapore, gold coins and bars are being sold at high premiums compared to the spot price, admist shortage. Reuters quoted one broker who said that most of the bullion dealers in Singapore were sold out of bullion, all customers as buyers, no sellers. Price volatility is not deterring physical buyers. Premiums remain strong in most markets. In India, supply of gold coins is seeing great shortages. Many states have actually run out of gold coins. In Hyderabad, a city of nearly 7 million people, gold and jewelry shops in the city have minimal stocks of gold coins and bars. Some shops have completely run out of stock of the best selling gold coins. Delays are common for replenishment of coin supplies from banks and bullion brokers, creating a delay in the entire supply chain. The inside scoop is that smuggling routes are being firmed, in response to obstacles presented by the Indian Govt. See the Silver Doctors article (CLICK HERE).

◄$$$ THE HONG KONG MERCANTILE EXCHANGE WAS A CRIMINAL FRONT AND STRUCTURED FINANCE VEHICLE. MYSTERY SURROUNDS ITS SHUTDOWN, AS ARRESTS HAVE BEEN MADE. THE EXCHANGE TO CEASE TRADING, IT CLOSED OUT & CASH SETTLED OPEN CONTRACTS MONDAY MAY 20TH. $$$

Recall that the HKMEx is the Rothschild baby, the work of a despicable vile human carbon unit. Charges of document falsification were lodged. The exchange closed suddenly after being in operation for only two years. It was expected to become a dominant force in Asia. Apparently its founders ran aground with important people. Consider the shutdown a watershed event. The exchange had been ignored, as it shut down amidst tiny volume traded. A mere 200 open contracts remaining to be settled upon shutdown. The controversy deepened when at least four HKMEx senior executive were arrested, having been found to be in possession of false bank documents valued at $500 million in redemption. The confiscated false documents included an acknowledgment letter, two letters of guarantee, and three proofs of funds allegedly issued by HSBC and Standard Chartered Bank, in addition to time deposits and a telegraphic transfer. A bizarre element owed to the fact that the political head of Hong Kong and the founder of the HKMEx were very close. Beijing had a big hand in shutting down the elite control room.

The entire HKMEx was being used formally as a highly structured gold financing vehicle. It is linked to China's Copper Financing Deals. The Chinese authorities are in the process of a major crackdown. After the recent collapse in the price of paper gold, suddenly the infinite rehypothection chain tied to HKMEx found itself in jeopardy, with margin funding pressure forcing collateral chains to break. Expect more revelations to the story, with possible fireballs hurled at the Rothschild castle. Before May had sunset, the exchange ceased trading, all contracts closed out in cash. See the Zero Hedge article (CLICK HERE). See also the South China Morning Post article (CLICK HERE) as a fifth arrest took place over more false documents.

## ALLOCATED GOLD ACCOUNT SCANDAL

◄$$$ MORE DIRECT TESTIMONY ON SWISS GOLD ACCOUNTS NOT BEING REDEEMED IN GOLD. OBSTACLES ON REDEMPTION INCLUDE A DISPLAY OF GOLD, BUT NOT BARS HANDED OVER. LIMITS ARE ARBITRARILY IMPOSED ON WITHDRAWAL, WHEN REDEMPTION IS PERMITTED. THE SWISS BANKS DO NOT HAVE THE CLIENT GOLD IN THEIR VAULTED POSSESSION, SINCE LONG GONE. THE ALLOCATED GOLD SCANDAL IS GATHERING TREMENDOUS MOMENTUM FROM WIDENING EXPOSURE. THE GOLD BULLION BANKING SYSTEM IS BEING EXPOSED FOR ITS FRACTIONAL DEVICES, WITH 100 TIMES AS MUCH PAPER GOLD AS METAL. $$$

Egon von Greyerz of Matterhorn Asst Mgmt has provided an update with more stunning news regarding clients being refused for redemption of their physical gold out of Swiss banks. The gold shortage intensifies. The bold crooks at the Swiss firms actually showed account statements denominated in ounces, when they should show statements in bar counts, whether in kilogram or ounce weights. The same banks claim to abide by limited withdrawals of arbitrary amounts, not stipulated in any original contracts. They are making it up as they go along. The paper gold market is heavily leveraged in a fractional banking system that has broken down, in the process of being exposed. The great Allocated Gold Account scandal is slowly erupting, as the Jackass forecasted two years ago, as The Voice warned in 2011. He again is proved correct, a safe voice of future events, echoed by Egon at Matterhorn. Von Greyerz said the following.

"At our company we are hearing more and more stories about banks not delivering gold that belongs to the client. We are talking about Swiss banks here once again. One client went to a Swiss bank to inspect his gold and the client manager said, 'YOU CANNOT SEE IT, BUT IT LOOKS LIKE THIS,' and he took a gold bar out of his drawer. The client showed me that he had a statement showing ounces of gold. Well, you do not own physical gold in ounces in Europe. You own gold bars either in grams or in kilos, but not in ounces. You know automatically that it was paper gold the client owned, because it was in units of ounces from a European bank. Another client went to a major Swiss bank and he wanted to inspect his gold, but the account manager said, 'I CAN SHOW YOU THE DOCUMENTS, BUT WE ARE NOT ALLOWED TO SHOW YOU THE PHYSICAL.' And this was a major Swiss bank. Just today we heard from a client that was going to take his gold out of two major Swiss banks. This bank told him that he could only take out 200,000 Swiss francs worth of gold per annum. They started off by telling him 50,000 to 80,000 Swiss francs of gold could be taken out, but eventually they went up to 200,000. The other bank told him that he could not take out more than 80,000 Swiss francs worth of gold per year.

So clearly these banks do not have the physical gold. If they do, it is very strange they will not show it to clients, and the clients are not allowed to take it out of the bank. So it is clear that many banks do not have the gold. The bottom line is the banks do not have enough physical gold to cover the commitment to their clients, and governments also have a lot less physical gold in the West than they claim to have. As the paper market is 100 times larger than the physical market, it means that paper market has virtually no physical gold to back it. My message is very clear: Investors must hold physical gold outside of the banking system because this paper market will explode one day." See the King World News interview (CLICK HERE and HERE).

In another setting, Von Greyerz warned that in the West, the people with savings and wealth do not comprehend that they have lost 60% to 80% in real terms over the last 13 years. Cash has lost 80% value in real terms, as have stocks, housing, commercial property, and many other assets. People live under the false illusion that paper money is a true measure of their wealth. Nothing could be further from the truth. It is vapor.

◄$$$ EVERY METALS TRANSFER REQUEST FROM MAJOR BROKERS IS BEING REJECTED MULTIPLE TIMES, ACCORDING TO A 20-YEAR VETERAN METALS TRADER WITH MORGAN STANLEY. CRUDE BRUTE OBSTRUCTIONS ARE BEING DEPLOYED. THE BROKER WAS DISMISSED FROM HIS WALL STREET FIRM FOR HIGH EMPHASIS GIVEN TO GOLD IN OVERWEIGHT ON CLIENT ACCOUNTS. ANOTHER ANOMALY TO EXPOSE. WHEN GOLD BARS ARE MOVED, THEIR WEIGHTS AND SERIAL NUMBER MARKINGS DO NOT MATCH. THE BULLION BANKERS ARE SCRAMBLING TO ACQUIRE GOLD BARS FOR REDEMPTION PURPOSES. $$$

An anonymous Morgan Stanley broker has come forward to provide direct evidence of the obstruction being used, as basic as it is, and of anomalies in gold accounts. He said, "I have been a broker for 20 years. Recently the major broker dealer I work for asked me and my clients to leave due to too high of a concentration in physical metals [in their accounts]. I am now in the process of moving my clients and metals to a new custodian. Here is where things get interesting. Every transfer is being rejected multiple times for the any reason the old major broker dealer can come up with. More interesting of all, when the old broker dealer finally does transfer the metals to the new custodian, none of the bars are the same in weight or serial number as my clients statements! The old broker dealer is having to come to me and my clients with bars of different serial numbers and weight than the one listed on the statements or from old trade confirms. This mismatch on transfers proves to me that the old broker deal never had the metals and is now having to go acquire them to make good on client transfers. I am 100% certain that most of the metals have been removed from the United States, and when the stock market and bond market crashes this fall, all metals in private accounts will either not be there, or be confiscated. Heed this warning, people, the end is here." See the Silver Doctors article (CLICK HERE).

The Voice confirmed the mismatch evidence from his vantage point far away. He wrote, "The mismatch of bar numbers and delivery delays has been the case for years, when trying to get clients metal holdings removed from Swiss banks. There are multi-$billion law suits pending where there are no deliveries at all. The banks are short between 40,000 and 60,000 metric tons of metal they sold to clients but physically do not hold in their possession. One of the biggest frauds ever, much like all the paper investments people hold." He has repeated his warning on the Allocated Gold Account fraud and scandal for two full years. It has finally arrived!! The gold tonnage volumes he refers to are of the same magnitude as the total global central bank holdings.

◄$$$ NO MORE GOLD IN THE ZURICH CANTONAL BANK OFFICIAL INVESTMENT ACCOUNTS FOR GOLD. AT LEAST THEY DISCLOSE THEIR FRAUD. THE EASY LESSON IS THAT LOW FEES MEAN NO VAULT SERVICE AND NO INSURANCE, THUS NO GOLD BARS IN POSSESSION. $$$

The client brochure received in the mail come from Zuger Kantonalbank. In the section 8.1 Metallkonto, it reads "Uber das Metallkonto ist es NEU moglich, Gold, Silber, Platin und Palldium NICHT PHYSISCH zu handeln." Excuse the missing umlauts, which do not appear properly. Roughly translated it means "It is now no longer possible to buy or sell physical Gold, Silver, Platinum and Palladium using the Metals Account." When clarification was sought, the ZKB officials stated that they will still buy and sell physical precious metals over the counter, but clients cannot hold the physical in a metal account. Therefore conclude that they no longer provide Allocated Gold Accounts. Actually they never did, although they called them such.

The fine print read by a Hat Trick Letter subscriber who went through the redemption obstacles in 2010, informing the Jackass at each step, indicated that the ZKB had the right to redeem in cash, when he did. The deception angered my client greatly, since he was led to believe for years by the bank that he owned physical gold at the ZKB with right to redeem in metal bars. The deceptive ZKB require a fee of 0.2% per year paid on a quarterly basis, which was assumed to be for vault service and insurance. A big reason why dullards and dimwits invest today in unallocated gold accounts like what the scummy ZKB offers is its low fees. No vault storage fees or insurance, which means no gold.

## DISORDER IN GOLD WORLD

◄$$$ DELAYS AT SWISS GOLD REFINERS HAVE GROWN LONGER. THE SUPPLY LINE DISRUPTION HAS GROWN WORSE. $$$

Swiss refiners are the largest and most established in the world. The dominate in the supply chain. Big delays have hit the industry, resulting in long supply line waiting periods. Egon von Greyerz of Matterhorn Asset Mgmt has informed that Swiss gold refiners have increased the delays to gold delivery up to a stunning five weeks. The Swiss refiners refine over 75% of the world's gold supply, in producing bars and other investment items. The shortages in supply are noted at the USMint and numerous other important markets in the world, including India and Turkey. Egon tossed in a gem comment at the end. "Silver will outperform Gold. We will see the Gold/Silver ratio going down from current levels to below 30, and maybe 20. So to talk about Silver over $100 is just the beginning. As an investment the move in Silver will be spectacular going forward." See the King World News article (CLICK HERE). Totally agreed by the Jackass on the Silver price and ratio.

◄$$$ HEAVY G.L.D. FUND REDEMPTIONS ARE BULLISH FOR PHYSICAL GOLD AT THE INDESCRIBABLY CORRUPT EXCHANGE TRADED FUND. EVIDENCE FINALLY HAS ARRIVED FOR CORRELATION WITH THE SHANGHAI GOLD PRICE PREMIUM. THE ARBITRAGE OF GOLD BETWEEN EAST AND WEST IS ON, TO EVENTUALLY PASS ON GIGANTIC VOLUMES. $$$

Huge redemptions and record recent outflows have occurred from the corrupt Gold Exchange Traded fund known officially as the SPDR Gold Shares, but known commonly as the GLD Fund. The mainstream tilted press prefers to call the trend negative for gold, but with the shallowest of justifications, and no analysis whatsover. The net redemption of shares early in year 2013 was likely to short the Gold market, using GLD inventory, a common easy trick for the big privileged US banks who have ready access to the GLD bars, and simple loading dock rights. One official reason might make some sense except for its circular logic. The other analytic reason with a firm ground is the arbitrage opportunity that drove market participants to redeem shares of GLD, grabbing gold bars, exploiting the higher Shanghai price in sales. Buy low in New York, sell high in Shanghai. The Wall Street filthy paper merchants explain that the GLD fund managers are working to match supply and demand so that the net asset value (NAV) of the ETFund is in line with its price. But if the big US banks raid the fund's inventory to sell into the market under suppression motives, then the gold price would go to zero faster than a dog eats his tail. The argument holds no validity.

Notice how the recent wave of redemptions in the GLD net flow graph below has occurred even while the premium to NAV has been very stable, hovering around 0% for most of the year. The real explanation involves China, and the arbitrage with the higher Shanghai price. The arbitrage was cited as a coming attraction and major upcoming factor a few months ago in the Hat Trick Letter.

Some analysts suspect that the Swiss bankers are using Wall Street bankers as intermediary (collusive criminal agents) banks to secure the gold bars at the SPDR Trust. The Swiss banks are grotesquely short of gold with which to meet customer demand of their own golds on account, not new orders. At the same time, physical demand in Asia has been extremely strong this year. According to the World Gold Council (WGC), Indian imports should reach 230 to 400 tons in 2Q2013, a rise over 200% annually. The supply must come from somewhere, and the Swiss refiners are way behind in meeting demand. Asian customers are paying a premium over the London Fix price in order to obtain physical gold. The so-called Shanghai Premium has finally arrived on the radar, as the Jackass fully expected. It is defined as the difference between the quoted official gold price derived from London Fix that feeds the COMEX price, versus the Shanghai Gold Exchange gold price. In the last several months, the Shanghai price has been notably higher. Since the beginning of the year, the Shanghai premium has been consistently positive, reaching more than $50 per oz. That is enough for profitable arbitrage.

Higher Asian demand for physical gold with its attendant higher Gold price creates arbitrage opportunities for market participants with privilege and access, including transportation devices, for instance. The bullion banks in New York and London happen to be the only ones able to redeem GLD shares. The GLD inventory can be easily picked over for its 1000 tons which acts like a large physical gold bank. It is often called the Bullion Central Bank. According to the GLD prospectus, the bullion banks can create or redeem units at a cost of 10 basis points (0.10%) per share. Even with transport and insurance costs a clear arbitrage opportunity for the bullion banks is presented. The Shanghai premium is as large, available, and potentially profitable. Given the intense global demand and widespread shortages, it seems obvious that the GLD inventory is raided as part of the arbitrage process. No obstacles exist, no laws prevent, and profit is presented, therefore it is done. The only impediment might be the knowledge that draining New York to build China will alter the geopolitical balance of power.

Since 2005, a strong negative correlation between GLD flows and the Shanghai Premium has appeared, at minus 53%. Translate the Statistics Greek to mean that large outflows (redemptions) from the GLD are typically associated with higher premiums in the Shanghai gold market, the volume response being around half the impetus after accounting for different units. If calculated for just the last 18 months, the correlation would be more like minus 80% or more, possibly even minus 90%, which is only seen in scientific laboratories. The norm for a very strong correlation in a social science setting is 35% to 40%, from years of Jackass experience in marketing research. From 2001 to 2005, the correlation between the USDollar and Gold price was minus 80%, another huge anomaly figure on the corrupt billboard. Since the beginning of 2013, the two series are moving in diametrically opposite directions.

In conclusion, the evidence seems powerful and convincing that opportunity has brought arbitrage profiteering. The big US banks might be moving from the USTBond carry trade to the Gold Arbitrage Trade in generating profits. The bond channel has little opportunity remaining, especially since bond yields are reversing. So far, the arbitrage profits are surely small by comparison to the years 2009 through 2013 in USTBond carry trade. The lack of availability of physical gold and massive dislocation between the physical and paper gold markets will propel the exploitation of the Shanghai Gold Premium further. It will tear apart the COMEX gold market and contribute toward shutting it down from vanished inventory. See the Zero Hedge article (CLICK HERE), as the Jackass once again is very grateful and impressed for their intrepid unique outstanding work. Zero Hedge has no peer on depth and breadth of coverage.

◄$$$ HEDGE FUNDS HAVE BUILT THE BIGGEST SHORT POSITION IN PAPER GOLD EVER. THE OPPORTUNITY FOR EASIER PROFIT ON THE LONG SIDE OF THE TABLE IS GRADUALLY PRESENTING ITSELF. WATCH FOR A COUNTER-TREND RALLY IN GOLD, EVEN IF BRIEF. $$$

Larger efforts are required to push the Gold price lower. With reduced profit potential (even though corrupt to the core), the more likely direction might be up for the Gold price. Any catalyst to trigger a short cover rally could be deadly for the hedge funds responsible for the outsized net short gold position in COMEX futures. Wall Street has a long history of wrecking hedge funds, even exploiting them as clients. The trigger might be a realization that greater profit lies from switching sides of the table, which fund managers are very experienced in doing. It only requires a few hedge funds to start the stampede. If China were to announce more specifics on a Gold-backed Yuan currency, or if China were to announce its true gigantic gold reserve account, then a buffalo stampede would crush the greedly hedge funds after their herd-like behavior going short in unison. The impact on the Gold price would be parabolic, taking it back to the $1600 to $1700 range quickly. See the Zero Hedge article (CLICK HERE).

◄$$$ GOLD STILL GLEAMS FOR CHINA'S MININF FIRMS. THEY HAVE TURNED TO ACQUISITIONS SO AS TO LOCK UP GLOBAL SUPPLY. CHINA HAS BECOME A LEADING FINANCIER TO NEW AUSTRALIAN MINES. STEPS APPEAR TO SOLIDIFY THE COLONIZATION OF THE NATION IN A COMMERCIAL SENSE. THE USUAL EUROPEAN AND AMERICAN FINANCE PARTNERS HAVE RETREATED, LEAVING A GAP THAT CHINA HAS FILLED. $$$

Chinese companies are buying up numerous overseas gold mines in their quest to become international giants. Growing Chinese mining firms are taking advantage of depressed company valuations, as they increase gold reserves by acquiring mines. Driven by strong domestic demand for gold, the pursuit is on. Obstacles are identified as mines not for sale, mines with diminished reserves, and mines located in politically unstable countries. Many viable mining firms have seen their valuations remain firm, while others have come down like in Canada, according to Kingwell. Deal activity has declined since last year, but Chinese gold miners continue to buy mines. A recent deal saw the Chinese gold miner Kingwell Group announcing plans to make an offer for more than a 50% stake in Brazilian Gold Corp, a Canadian mining firm with a major project in northern Brazil. The total vlue of deals launched by Chinese companies this year (five complete months) has reached $436 million, according to Dealogic. The pace is less than last year, when $2.9 billion in deals were struck. In Canada, a total of $260 million worth of deals have been struck. Many firms are reacting to the decline in gold prices by selling off assets. That is NOT progress, but rather a defensive departure. Also, keeping a low cost mine in operation is foolish since it squanders the asset.

In May, Shandong Qixing Iron Tower (listed in Shenzhen) agreed to acquire the gold assets from Stonewall Resources out of Australia for $140 million. State-owned Zijin Mining Group, China's biggest gold producer by output, expects to bid for three mines owned by Barrick Gold in Western Australia. In August 2012, Zijin acquired more than a 50% stake in Australian miner Norton Gold Fields. On its website, the aggresive gold mining firm said it wants to be an international leader by 2020. The motive is to do it by acquisition of supply. Demand in China remains strong, bolstered by the April market ambush by the paper mache artisans of COMEX. The nation is the world's largest consumer of the precious metal. China's gold demand rose 20% from a year earlier in the three months ended March 31st, according to the World Gold Council. See the online Wall Street Journal article (CLICK HERE).

China is fast becoming the lead financier to new Australian mines. They have committed over US$1.5 billion (A$1.55 billion) to projects listed by Beijing for development. They wish to secure a diverse and long-term supply of metals vital to that Chinese industrial development, as well as investment. The unique continent of Australia is morphing into a colony of sorts. Traditional financiers for Australian projects in Europe and the United States have retreated from the sector. The EU and US have severe credit problems and have directed attention internally during the gathering implosion. Their stock markets have been closed off as a capital source. The Chinese network of development banks, mining companies, and engineering groups have taken up the slack. A recent deal was announced by Rex Minerals, whereby Chinese interests will facilitate US$550 million in debt funding for Hillside copper project on South Australia's Yorke Peninsula. Total project costs are estimated to be US$800 million for development. See the Australian article (CLICK HERE).

◄$$$ A NEW LAUNCH OF A CHINESE EXCHANGE TRADED FUNDS IS IMMINENT. HUA-AN AND GUOTAI ARE SET TO LAUNCH VERY SOON. AFTER GAUGING THE DEMAND AND WINNING APPROVAL, ONLY MINOR HURDLES REMAIN. $$$

The HuaAn Asset Mgmt managers expect the Chinese Gold ETFund to raise up to $489 million quickly. It will be one of the first such Chinese Gold ETFunds. After initial gauges, they measure the market potential as huge. The fund's portfolio manager Richard Xu said, "We think we could raise about 2 to 3 billion Yuan initially [~US$400 million]. We have received positive responses from institutional investors due to the lack of access to the gold market on-shore in China." That amount would buy about 250,000 ounces per year. HuaAn has received strong indications of interest from brokerages and hedge funds in China, after receiving approval from the China Securities Regulatory Commission (CSRC). A study by Blackrock showed recently that total global assets in gold exchange traded products (ETPs) shrank to $96.2 billion in May, down 32% from $141.2 billion at the end of 2012.

The CSRC also approved Guotai Asset Mgmt to launch a Gold ETFund. Guotai has arranged for relationships with banks and securities houses to sell the ETFund, according to the marketing department of Guotai in Shanghai. HuaAn will start marketing its Gold ETF this month and aims to launch the product as soon as possible afterwards, once certain minor hurdles are cleared.

◄$$$ RESERVE BANK OF INDIA NEARS PANIC IN ITS WAR AGAINST GOLD. THE CENTRAL BANK HAS BANNED GOLD IMPORTS WITH BANK CREDIT, NOW CASH ONLY. THE INDIAN GOLD BILL FOR APRIL AND MAY REACHED $15 BILLION. ROUGHLY HALF THE TRADE DEFICIT IS ATTRIBUTED TO GOLD IMPORTS. $$$

The falling Indian Rupee currency has caused a minor panic in New Delhi. The Reserve Bank of India has moved to ban the import of gold by domestic consumers through bank credit, and has made overseas purchase of the precious metal possible only on a cash basis. Nothing can stop Indian citizens from purchasing gold products. The decision will harm the retail jewelry trade, but not stop it. It will lead to higher smuggling into the country. The central bank has barred gold importers from using letters of credit from banks in order to secure gold imports. The requirement is 100% cash margin basis, thus a cash & carry trade. India will adapt. See the Economic Times article (CLICK HERE). A nasty vicious cycle has emerged. Indians use gold to protect against price inflation, largely caused by a Rupee currency in decline. The gold used as inflation hedge is mostly imported, resulting in still lower Rupee exchange rates.

In my opinion, the nation of India must initiate more gold mine industry on the base hills of the Himalayans. They have the capital. They have the mine potential. They have the engineering skill set. Doing so would produce gold with local devoted currency, avoid the import effect, and lead to greater employment. My excellent contact EuroRaj claimed such mining projects would be impractical, but profit potential always finds a practical path, this time to the Himalayan foothills.

For the two months April and May, the cost of gold import purchases exceeded $15 billion. The single month of May trade saw a deficit for India of INR 1108, equal to US$19 billion. Hence the gold import factor is staggering huge, at 40% of the trade gap, and important at a national level. See the Trading Economics article (CLICK HERE) for trade data. Expect more curbs on gold coin sales by banks. The official Indian Govt efforts appear to be futile. The nation consumed more gold in May after the massive price decline in April when the ambush occurred.  The world's largest gold consumer remains India, which imported around 162 tons of gold in May, a rise from 142.5 tons in April. The Indians love ornate gold jewelry, a tradition, not just coins, bars, and biscuits. See the Bullion Street article (CLICK HERE).

◄$$$ THE INDIAN CENTRAL BANK HAS PROHIBITED SALES OF GOLD COINS BY BANKS IN A DESPERATE SEEMINGLY GOOFY MOVE, FOLLOWING AN SILLY IMPORT TAX. PERHAPS NEXT IS A BAN ON WEDDINGS FOR THE NATION. $$$

Indian people will not stop buying gold, including jewelry or coins. The physical gold shortage is ongoing and worsening. In the first week of June, the Indian Govt imposed gold import duties between 6% and 8%. The purchases continued undeterred. The Finance Minister Chidambaram decided to escalate. The Reserve Bank of India has advised banks against selling gold coins to retail customers, in an attempt to ease pressure on the nation's bloated current account deficit. Expect next a panicked, chaotic buying scramble, in the words of Tyler Durden. See the Zero Hedge article (CLICK HERE). One must wonder if a ban on wedding ceremonies with gifts will be the next absurd rule.

◄$$$ NOT ONLY IS ABN-AMRO DENYING CLIENTS THE DELIVERY OF GOLD FROM ACCOUNTS, BUT THE BANK IS SHRINKING INTO A SMALL SHADOW OF ITS FORMER SELF. IT WILL HAVE SOON ALMOST NO GLOBAL PRESENCE. IT DESERVES SOME LEGAL REMEDY BY THE COURTS, FOR ITS CONTRACT FRAUD. $$$

ABN Amro will gradually morph into a boutique bank, its days of a global bank having faded. The Dutch bank peaked in size at 108,000 employees in 2006. It has been reduced with indignity to a mere 24,225 employees, certain to shrink further. The number of countries with ABN Amro offices is down from 56 to only 23 countries, expected to shrink below 20 countries before the end of 2013. More announcements have come in May for additional paring of head count. Amidst a struggle to keep sales going for the corporate bonds and a 17% decline in the most recent quarterly profits, the Dutch Govt custodian announced a further cut of 400 jobs. The state-owned bank plans to eliminate positions in its commercial and merchant banking unit on top of an earlier announced 2350 job reductions. Their stock has been de-listed from the stock market. The humbling experience has a most recent plank, in the nationalization or decimation of all four major major Dutch banks, Rabo, ING, ABN Amro, and SNS Reaal. They will no longer operate in the global space any longer, but rather serve the local Dutch market. See the Bloomberg article (CLICK HERE). A death experience might await ABN Amro after their gold contract fraud, which deserved legal prosecution and investor lawsuits.

## GOLD PRICE IN SUSPENDED ANIMATION

◄$$$ MINE OUTPUT IN THE UNITED STATES AND CANADA CANNOT KEEP PACE WITH THE SILVER COIN DEMAND FROM THE NATIONAL MINTS. THE MINT SALES FOR THE TWO IMPORTANT NATIONS ACCOUNT FOR THE ENTIRE DOMESTIC SILVER SUPPLY AND MORE, CREATING A LARGE DEFICIT. MINE OUTPUT IS SET TO DECLINE FROM FALLING PRICE AND NUMEROUS DISRUPTIONS. THE INDUSTRY REQUIREMENTS APART FROM MINTING BULLION COINS MUST COME FROM IMPORTS, A STRAIN ON DEMAND. PRICE MUST ADJUST CONSIDERABLY HIGHER TO BRING THE EQUATION INTO EQUILIBRIUM, A CONCEPT BEYOND THE GRASP OF HACK ECONOMISTS. $$$

The market always returns to fundamental factors that force price to respond to imbalance between Supply versus Demand. The US and Canadian Silver mine output is totally consumed by silver coin production at the USMint and Royal Canadian Mint, an astounding data point. A grand shortfall is at work. One might wonder why such a basic fact is never mentioned on the financial news wires (propaganda) or talking televised toots (soft porn marketing). The press prefers to focus on false price inflation claimed as tame, and wrong interpretation of COMEX declines in egregious manner.

Compare coin sales data to the mining statistics from these two countries. According to the USGS in 2012, the United States mined around 34 million ounces of silver, while Canada mined around 17 million ounces of silver. Total is 51 moz silver. Next, extrapolate US and Canadian coin sales from their national mints to determine how many ounces of silver will likely be sold by the end of the year. Various methods exist. The linear calculation is not accurate since bullion sales are highly seasonal in nature, not at all linear.

A better method is to compare sales year to date with a similarly strong year of sales, then multiply the annual total by the same ratio seen in the partial realized year. Year-to-date US sales are 21.7 million ounces of silver sold, which is around 15% higher than the second highest year-to-date sales for this period, seen in 2011. It is fair to expect the current pace to continue through December. So augment the 2011 total of 39.8 moz silver sold by another 15% to arrive at a forecasted total. The 2013 annual forecast of US silver coin sales is thus 46 moz. Next Canada, where the growth has been torrid. For all 2012, the Royal Canadian Mint sold 18.1 million silver maples. Extrapolate the first quarter numbers out for the rest of 2013, based on 65% higher sales in 1Q2013 versus than first quarter 2012. The result is an annual 2013 forecast of 30 moz in Canadian silver coin sales. The Canadian forecast is actually conservative, since the month of April saw record breaking sales in a surge. With 46 moz in US and 30 moz in Canada, the total 2013 silver coin sales comes to a forecasted 76 moz. Neither nation has mine output to cover its silver coin sales. Given the mine output of 51 moz in year 2012, the shortfall will be 25 million ounces for silver coin production at the mints alone!! Silver will have to be imported to satisfy mint demand.

Mine production forecasts were based on 2012 USGS totals. Nothing stays the same. The many primary silver miners are struggling to produce silver economically at current prices. The majority of silver miners are already operating at market prices below their all-in production costs for silver. Look for significant cost cutting and reductions in exploration, thus in silver output. The logical result is much lower silver production for 2013 from production cuts. The 25 million ounce silver deficit for bullion coin production will be much higher. Then consider the demand is ramping up. The shortfall will be enormous, a pressure point for the Silver price.

Finally, consider that industrial demand will have no physical silver supply at their avail. Their silver needs will come from imports of silver. Expect no help from silver scrap supplies, which make up 25% of silver supply. The lower silver price will cut into the scrap supply coming to market, since a deterrent. Considering the exceptionally large short position that hedge funds have taken in Silver, and all the ingredients are present for an explosion in the Silver price. Pay no attention to the news wires and talking toots. They know nothing. See the Seeking Alpha article (CLICK HERE).

◄$$$ BULLION COIN DEMAND UNPRECEDENTED AT THE USMINT. $$$

Richard Peterson, acting director of the USMint, calls demand for Gold & Silver coins unprecedented. Remove the hype and propaganda and bias. The demand level for coins is at very high levels almost two months after the historical price decline in April, regardless of its corrupt roots. The USMint is buying all the coins being produced by their suppliers. It aint enough. See the Zero Hedge article (CLICK HERE).

◄$$$ DECLINE ON THE SILVER SUPPLY SIDE WILL TURN ACUTE AND NASTY, FOR A BIG SURPRISE TO THE MARKET ALREADY IN SHORTAGE. THE DYNAMICS ARE PRESENT FOR A HUGE UPSIDE SILVER PRICE MOVE. $$$

Mexico Mike pitched in with some good insights. The lower price is having a direct business effect on project management by the mining firms. He wrote, "New mine supply is a big part of the story. For sure actual Silver production has increased significantly during the last few years as the price was rising. However, think of how many large projects have gone offline in the last year, or been significantly delayed. This week Kinross announced that Fruta Del Norte would not be developed. Barrick Gold is having major issues with Pascua Lama. There are many other projects large and small that are held up right now. You can expect this trend is going to limit the total supply story for silver in the years ahead. Now it is true that the reported shortages of small bar bullion are not necessarily an indication that the market is in default. However, there is enough smoke billowing from various sources to have me thinking there is a fire somewhere. At the end of the day, we know that more Silver is dumped in paper contracts than can be delivered from worldwide supply. Just add up the total trading volume from the COMEX to see that some days a billion ounces of silver leverage may trade, in a market where world supply is less than that for an entire year." An explosive upside move in the Silver price is coming. The dynamics are all there, huge rising demand, with supply in decline.

◄$$$ SHANGHAI WILL SLASH GOLD & SILVER MARGIN NEARLY IN HALF! THE RECENT GOLD AMBUSH IS LIKELY TO CUT GOLD PRODUCTION BY 10% OR MORE, AS FIRMS FACE A HOST OF CHALLENGES. GIVEN THE BIG PROPERTY SNAFUS, EXPECT A 20% DECLINE ON A GLOBAL BASIS. DEMAND CONTINUES WHILE SUPPLY WILL ENTER DECLINE. THE BANKERS ARE SO SCREWED!! $$$

In the first week of June, the Shanghai Futures Exchange announced a surprise cut its Gold & Silver margin requirements. It goes directly against the corrupt COMEX, which abuses margin to manage the price suppression. The Chinese bourse will reduce margin requirements for the precious metals futures contract to 4% from 7%. The change will go into effect on June 25th. Global demand has been a house afire since the illicit paper ambush in mid-April. On the other side of the price equation, the supply of gold from mine output should decline substantially. The factors are aligned in several negative ways for mining firms. When prices plunged in the 2007 to 2008 period, gold production fell by 9.4% globally. The present conditions for mining firms are much worse today. Expect gold production to fall by 20% this time around in a shocker that will NOT be expected.

Balance sheets across the gold mining sector are much worse than five years ago. Production cutbacks from the major producers are being announced, from simple economics of closing down unprofitable mine projects. These factors are at work to reduce mine output, apart from worker strikes, mine accidents, legal challenges on ownership, and nationalization by grubby governments. The Gold metal price will be supported on a long-term basis by the supply cutbacks, as shortages will remain acute. The global demand will continue as long as central banks wreck the currencies via debasement and wreck the economies from cost increase indirect responses. No stimulus exists anywhere, not from monetary policy and surely not from austerity programs. The pressure is staggering for the Gold price to rise, corrupt market or not. See the Silver Doctors article (CLICK HERE).

◄$$$ VIETNAM GOLD PREMIUM REACHED $217 PER OUNCE ON JUNE 17TH. THE ASIANS KNOW WHAT MONEY IS, AND IT AINT ON PRINTED PAPER WITH GUARANTEES. CRISES HAVE HIT VIETNAM SUDDENLY IN THE STOCK MARKET, THE PROPERTY MARKET, ALONGSIDE TOUGH CURRENCY DEVALUATIONS. $$$

The Vietnam Central Bank sold another 25,700 taels (1 tael = 37.5 grams or 1.2 troy ounces) equal to 38,400 oz at a gold bar auction on June 14th. The auction was intended to satisfy the enormous public demand for gold in Vietnam. The stated goal is to bring down high premiums paid by gold buyers in the nation. An odd fact is that Vietnam, the largest buyer of gold in Southeast Asia after Thailand, is perhaps the largest physical buyers of gold per capita in the world. The nation knows all too well the ravages of war, inflation, and currency depreciation. Recent months have seen a bust of their stock market and a bust of their property market, along with the continuing devaluation of the Dong currency. Hence the record gold demand in Vietnam, pushing a fast rise in the gold premium price over spot. On June 17th, the premium was about 5.5 million Dong, equal to $217 per ounce over spot. See the Gold Core article (CLICK HERE). A previous auction at the Vietnam Central Bank registered a $150/oz premium paid almost a month ago. The auction was fully subscribed. The pattern is clear over time. See the Economic Times article (CLICK HERE).

◄$$$ ANOTHER BIG MINE SHUTDOWN, AT THE LARGEST IN THE WORLD. GRASBERG IN INDONESIA WAS TO REMAIN CLOSED FOR THREE MONTHS. A WHOPPING ONE MILLION OUNCES IN GOLD OUTPUT IS HALTED. THE TIMING OF THE GRASBERG SHUTDOWN IS HORRIBLE, GIVEN THE HUGE GLOBAL GOLD DEMAND. $$$

The catalyst is elusive to trigger a Gold market stamped. Sentiment is deeply negative. Nothing stops the slide in the corrupt gold market, the price appearing unaffected by unprecedented demand and widespread shortage, both on a global basis. Enter a new factor to harm gold mine output. In Indonesia, the world's biggest gold mine has been shut down for safety reasons linked to collapsing walls. The shutdown will be for an extended period after a string of incidents that have befallen a weary work force. The largest gold mine in the world is the Grasberg mine, operated by Freeport McMoRan Copper & Gold located in Indonesia. This monster mine project site has averaged over one million ounces of annual gold production over the last three years. The great volume will go offline. The firm claims it contains the world's largest gold reserves. Unfortunately,Grasberg has hit a number of setbacks. In May a tunnel collapsed, trapping workers. The government responded by shutting down the entire facility while safety inspections were conducted. Only the open pit mine resumed operations later. After an interior wall collapsed on May 31st, the local mining ministry ordered the shutdown of all operations at Grasberg for at least three months, while the accidents are investigated and safety precautions are taken.

The zinger element is unhappy workers and ongoing contract negotiations. If a strike ensues, then production may be halted for much longer. Then comes the nasty potential for the Indonesian Govt to consider nationalization, since the mine could represent an entire central bank. See the Seeking Alpha article (CLICK HERE) and the Mining Business article (CLICK HERE). Bear in mind that the Pascua Lama mine in Argentina and the Kennecott mine in Utah USA are both cutting deeply into the global mine supply line, since their shutdown also.

If it is not violence that results in worker deaths at the hands of mining firm security, or hostile government confiscation of property in the resource nationalism, or legal challenges for ore deposit property ownership, it is wall cave-ins and safety concerns. Many are the disruptions to mine output and the grand supply line for the Gold & Silver market. The Jackass remains steadfast in preferring the metal over the mining shares, mere paper in a world of collapsing walls of paper wealth. One more story, great for the metal price, bad for the mining stocks. Grasberg represents a lot of gold supply vanishing. Thanks to Fabrice for the story, as he added adroitly "A big risk exists for nationalization of the mines, which makes sense if Gold goes right back at the center of the monetary system." Central banks will not permit foreign mining in their countries in a Gold Standard new world. They will not allow foreign interests to own the natural supply channel to the central banks vaults.

◄$$$ DEMAND FOR PHYSICAL METAL IS EXTRAORDINARY. IF NOT THE STRONG DEMAND, THEN THE THREAT TO BANK ACCOUNTS WILL LIFT THE GOLD PRICE. $$$

Gold expert James Turk and founder of GoldMoney is not worried about the recent sell-off in the deeply corrupt COMEX, which purports to be a precious metals market. It is more a gathering of corrupt contract fraud kings, with black ink that bears the same letters as gold. Turk is supremely confident of a much higher Gold & Silver price in the coming months. He adds how banks will undermine citizen confidence, as depositors depart the corrupt banking system, later to seek true safety. Turk said, "At this level, we have probably gone as low as we possibly can. The paper traders and the derivative traders have pushed it about as far as they can, but the demand for physical metal is extraordinary down here at these levels. Within 12 months, Gold is going to make a new record high over $2000 an ounce, and Silver is going to double. It could happen sooner depending on how events unfold. It is inevitable you are going to see bail-ins [from bank failures] as we go forward from here, because the capital just does not exist. The problems we have been confronting the past several years have not gone away. Governments have been trying to buy time, but they are not coming up with any solutions." See the Before Its News article (CLICK HERE) which includes a video interview. It has been a constant Jackass point made that the bankers are not even attempting to bring solutions to the table. They work to preserve power, to tap into government largesse, and to redeem their toxic bonds. The bankers will not liquidate the problem banks, where their power lies and their syndicate manages the whirligig.

## EUROPEAN DESPAIR & DESPERATION

◄$$$ GERMANY HAS DONE A COMPLETE REVERSAL IN PROMOTING STIMULUS, NO MORE AUSTERITY. TOTAL WASTE OF TIME, MONEY, HOPE. AT LEAST THEY RECOGNIZE AUSTERITY IS A SCUTTLE POLICY, NOT A RECOVERY PLAN. DESPERATION TO AVOID SOUTHERN EUROPEAN DEBT DEFAULT LOSSES BY GERMAN BANKS IS THE MOTIVE. EXPECT NO SUCCESS. GERMANY MUST LOOK EAST FOR THE FUTURE. $$$

Austerity is finally being recognized for the Poison Pill that it is. Great cutbacks in spending should only accompany sweeping programs to liquidate the big insolvent banks in a grand restructure that includes tax reform and social network reform. Budget cutbacks are a perfect way to pull the plug on the entire economy, since they accelerate the recession and add job cuts while reducing projects as well as pork. They bring hardship, deprivation, and unemployment, along with greater deficits. Poison pills also put a damper on national spirit, even push the youth into a mindset of hopelessness. The German Govt did an about face, a complete reversal, with a gamble on stimulus. It will accomplish nothing, only delay the inevitable, since not part of any comprehensive meaningful restructure initiative. The death of Deutsche Bank will come, but it will happen from implosion, not planned restructure.

The German Govt has backed off its austerity mandates, instead to spend billions to stimulate ailing economies in Southern European. Consider it a last ditch failure venture. Saving the Euro is not possible. Some delusions persist that the dead banks to the South can be kept on life support, and thus spare Germany of debt default losses. So the rotten tables to the South, with their hollowed banks and tattered industries will receive some blood transfusions, all for naught in a worthless exercise steeped in delusion and desperation. Merkel and Schauble can hold their heads high as the ship sinks and real hope lies to the East with stronger commercial and trade system ties. Call it a new way of thinking in the German capital, but too little, too late, wrong focus, and wrong blueprint manual. See the Spiegel article (CLICK HERE).

◄$$$ GERMAN UNEMPLOYMENT INCREASED FOUR TIMES MORE THAN FORECAST IN MAY. BUSINESS CONFIDENCE HANGS ON, BUT DESPAIR AMONG THE FERTILE YOUTH. THE ABSENCE OF JOB OPPORTUNITY COULD LEAD TO YOUTH VIOLENCE, SEEKING CHANGE RAPIDLY. $$$

German unemployment rose more than four times more than economists forecasted in May, as the EuroZone sovereign debt rot crisis and economic collapse continue untreated. The number of people out of work climbed a seasonally adjusted 21,000 to 2.96 million, as per the Federal Labor Agency. It was the fourth straight monthly rise, against 5000 net job losses predicted by domestic economists. The adjusted jobless rate held at 6.9%, but surely they do not count all discouraged workers. The German GDP grew by 0.1% in 1Q2013, after a 0.7% decline in the final quarter of 2012. The entire EuroZone remains mired in recession, dragging the Germany powerhouse down. Still, business confidence rose this month for the first time since February. See the Bloomberg article (CLICK HERE).

◄$$$ AUSTERITY AND YOUTH IN EUROPE MIGHT CREATE THE CONDITIONS FOR A REBELLION. LEADERS HAVE NOTICED THE PROBLEM, WITH JOBLESS YOUNGER CLASS, LITTLE HOPE, AND COMMON STREET RALLIES. THE LEADERSHIP CREW IS VERY WORRIED. BANKER WELFARE HAS REAPED ROTTEN FRUIT. SOCIALISM DOES NOT WORK (LITERALLY). $$$

German Finance Minister Schaeuble warned publicly that unless Europe wins the battle against youth unemployment, revolution is a distinct possibility. It was a bold statement, on the minds of several leaders in several countries. The dreaded thought arose as some corners push to reform German welfare standards. Schaeuble told a conference that if US welfare standards were enacted in the EU, the revolution would start the same day. He called it completely untenable to adopt such a set of rules, due to system shock. Youth unemployment stands now across the EU at 25%, double the rate of older citizens. The EU nations such as Germany, Italy, and France support urgent action to tackle the issue before it becomes even more systemic and dangerous a problem. Anecdotes out of Spain report college graduates turning 30 years of age without ever holding a job. Labor ministers in Italy claim that they have the best educated generation but policies have put their future on hold. The problem and its social spillover has extended north to Sweden, which has suffered riots in Stockholm.

The ultimate problem is still not recognized. The solutions to the problem are not accepted, bank liquidation, tax reform, social network overhaul, amidst grand restructure. The central banks desire to continue the QE policies have failed to generate any real job growth, since only a stop gap for banker welfare. Some analysts postulate that the grandiose monetary stimulus could have supplied the entire population for a $50,000 annual salary for ten full years instead. Financial sector buttresses alongside systemic unemployment seem like a tragic contrast that invites social uprising. Socialism does not work, literally, since managed disintegration. Combine with banker welfare, and the system implodes, as seen.

◄$$$ SPAIN IS GOING TO THE SHITTER WITH QUICKLY ACCELERATING DEFICITS. THE FAILURE OF AUSTERITY IS IN FULL VIEW. NO SOLUTIONS ATTEMPTED. IMPLOSION IN HIGH GEAR. $$$

The implosion from untreated deterioration continues across Europe. The crash is most evident in Spain. Its beleaguered central bank reported the nation's debt jumped to a record 88.2% of GDP in 1Q2013. The annual rise in debt was the fastest on record. Spain's debt was EUR 922.8 billion at the end of March, up 19.1% from a year earlier. The debt ratio grows worse by the quarter. No solutions attempted, sure not from austerity, as the preference by Spain has been to delay proper financial sector accounting like ostriches with heads in the sand for several years. The jobless rate is at 27.2% after a fourth year of recession. The debt-to-GDP ratio in the last five years has doubled. Expect the financial sector to continue with bank failures for a couple more years, as the property bust and its resolution will drag on endlessly. See the Zero Hedge article (CLICK HERE) and the Global Economics article (CLICK HERE). See also the excellent report by Dansk Research (CLICK HERE).

Spain is the most visible proof of the failure to apply a single real solution. By the way as footnote, the US debt ratio is worse, having surpassed the magic 100% line. The US is Spain times six in population, but even more lethal since the New York banks share the load in holding up the Western banking system. Refer to a sense pertaining to vaporous bank derivatives, but also in the standard criminal hold-up (robbery scene).

◄$$$ JOSEPH STIGLITZ BELIEVES EUROPE HAS COMMITTED SUICIDE WITH MONETARY AND POLITICAL POLICIES. THE ENTIRE PATH IS DESTRUCTIVE. THE CENTRAL BANK MINDSET IS ERRANT AND FLAWED. NO CREATIVE DESTRUCTION IS VISIBLE, ONLY DEEP DETERIORATION WITH A CRIMINAL ELEMENT AT WORK. $$$

Joseph Stiglitz was awarded the Nobel Prize in Economic Sciences in 2001. Talking of the European Union austerity plans, Stiglitz in 2012 had just one thing to say: suicide pact. Full agreement with the Jackass then and now. He expected, and voiced his concern, that imposing austerity on the nations of the EU would do nothing more than lead to the collapse of their economies. Nobody listened to him then, and nobody is listening to him now. Politicians today in the EU are determined to retain power, just like in the United States. The entire system is at risk, since political decisions will lead to the downfall of the economic structures. Nations are governed by leaders overly influenced by flawed economic theory, and by people who have no concept of what economics is. The leaders and their masters are accomplished only at retaining power, the power to make policy, the power to control money, the power to influence law enforcement.

Witness the failure of applying the Keynesian Economic school of thought. He advocated austerity to be put into place when the economy is in the strong upswing, not downswing. To cut spending in unison across nations can only bring about the paradox of thrift, but with broad accelerated decline as the outcome. But wrecking the system might be the true underlying motive, for imposing a great fascist state, with Greenspan a main architect. The words are empty on exporting our way out of recession, when the key industries were outsourced to Asia over three decades. The initiatives for currency devaluation are as errant as they are destructive, robbing Peter to enrich Paul. The technology has been abused, having created bank derivatives and employing kooky risk off-load schemes. The West is led by corrupt bankers, ignorant politicians, and their sorcerer apprentices dressed in economist clothing. See the Zero Hedge article (CLICK HERE).

Central bankers still dont comprehend the depth and nature of the problem, which is insolvency and not liquidity. The zero bound interest rate does not work, since it distorts all asset prices by altering the cost of money as free. The bond monetization does not work, since it undermines the currency, causes the cost structure to rise, and imposes a moral hazard whereby a bond black hole is created with a carry trade appendage. The boom and bust cycle is a sign of failure, not a natural course of events, due to malinvestment and credit saturation. The tremendous growth in money supply is not the saving feature, but the spread of poison gas to the system with a Weimar label. This is not creative destruction, but rather corrupt distorted predatory destruction on the road to profound perdition. See the Zero Hedge article (CLICK HERE). Ironically, the United States is in the process of rejecting austerity. Hence its collapse will be slower than in Europe.

## UGLY USECONOMY SNAPSHOT

◄$$$ CLEAR SIGNALS THAT THE USECONOMY IS ABOUT TO SLOW DOWN IN A BIG DOWNGEAR. THE MAJOR EMPLOYERS ARE CUTTING JOBS. MANY US-CITIES ARE A BASKET CASE, WITH DETROIT NOT ALONE. $$$

Michael Snyder provided 12 clear signals that the USEconomy is not just in recession, but in the process of slowing down much more rapidly. They include low mortgage rates without public participation in any recovery, lower mortgage application volume, and mass layoffs at three large mortgage institutions. Refinanced mortgage applicagtions are down 65% to 90% in the past three weeks of May. Average hourly wages took a plummet in the first quarter of 2013. The ISM manufacturing index declined to 49.0 in May, below the magic 50 line, the first indication of contraction in a few years. Note the first pullback in manufacturing activity in the US seen since 2009. The factory inventory/sales ratio has hit the lowest level seen since 2009. So a lot of inventory just sits, not bought. The demand for computers dropped by a stunning 9% during the month of April, far more than any i-Pad effect. Corporate revenues are falling at Wal-Mart, Proctor & Gamble, Starbucks, AT&T, Safeway, American Express, and IBM. Job growth at small businesses is half the level versus the beginning of the year. World stock markets are in a tizzy. See the Zero Hedge article (CLICK HERE).

The bad news came from IBM, Caterpillar, Chrysler, and even the city of Detroit. The computer industry giant plans to lay off 6000 to 8000 workers worldwide. The big CAT will lay off one third of its workers in Wisconsin. They mentioned lower machine orders from mining customers, a further confirmation that mine output will enter a pronounced decline in 2013. More pressure on the Gold & Silver prices. Chrysler plans to freeze pensions for 8000 salaried employees in an effort to limit future liability. Lastly, some of Detroit's creditors are being formally petitioned to accept pennies on the dollar in debt payoff in restructure. The proposal includes an offer that amounts to less than 10 cents on the dollar on some of the city's unmet debt obligations.

◄$$$ JOB LAYOFFS ARE RISING FAST AND FURIOUS, AS SEQUESTERED FEDERAL SPENDING CUTS HAVE BEGUN TO HIT MAIN STREET. $$$

The USGovt does not know how to cut jobs with fiscal prudence. But they do have the newfound ability to furlough workers without pay. Close to a million federal employees have been told that they will be given unpaid furloughs for several days this year, the total actually having taken them so far being quite low. Aggregate government worker income should decline in May, given that furloughs started late in the month. The first day of official nationwide furloughs was May 24th, when 115,000 federal workers, equal to 5% of the total federal work force, stayed home without income. The majority of the furloughs will kick in at the start of July, including 680,000 furloughs at the Pentagon (Pentagram) beginning July 8th. The real income shock will not show up until the July personal income and outlay report on the following month. See the Zero Hedge article (CLICK HERE).

◄$$$ THE WAREHOUSE NICHE BUSINESS IS SUFFERING AT OVER-CAPACITY IN CALIFORNIA. EVIDENCE OF VASTLY REDUCED SHIPPING COMMERCE. $$$

Anecdote from DonZ of Florida, with ties to California. "Last week, I visited Los Angeles to see my grandchildren. I stayed at the Hotel Angelino in my son's neighborhood. At the pool, I met a realtor from the Oakland Bay area chortling about the strength of his local real estate market. Later I shared my view of a Treasury Bond bubble top and its consequences. He told me that he was handling a listing for the cargo warehouse manager for the Port of Oakland. The manager's job was space allocation for stored cargo. He was downsizing now because the warehouses are empty, totally. The manager thought No Demand. In turn, my thought was of no USDollar acceptance for trade. Either way, it corresponds to the Baltic Dry Index. This must be happening quietly all across our nation's ports. Big implications!"

◄$$$ HOUSING PRICES ARE BEING DEEPLY DISTORTED BY WALL STREET AND BIG INSTITUTIONAL MONEY. THE POWERFUL MOVEMENT FOR CONCEALED ELITE COMMANDEERING OF THE HOUSING MARKET WITH USGOVT COLLUSION HAS BEGUN. HEDGE FUNDS AND PRIVATE EQUITY FUNDS ARE ENTERING THE MARKET AS CARPETBAGGERS. THE NEW MASTER LANDLORD WILL BE WALL STREET FIRMS AND THEIR FAVORED SONS AMONG THE HEDGE FUNDS. THIS AINT FANNIE MAE RENTALS, BUT THE UPPER MEZZANINE. CONSIDER IT A GRAND FASCIST RESIDENTIAL PROPERTY INITIATIVE, FOREWARNED BY THE HAT TRICK LETTER A FEW YEARS AGO. $$$

Big institutional money is seeking rental income and future capital gains. They are slowly gobbling up distressed property held by the millions on the bank balance sheets. A new elite landlord class is coming, straight from Wall Street and major private equity fund offices. The Wall Street institutional buyers are behind the scattered home price recoveries in certain key markets. The March Market Pulse report from CoreLogic examined the rise of institutional investors and the effects they are having on distressed inventory. Their analysis found 16 major US housing markets burdened chronically by huge bank owned inventory (REOs), most in rebound. The market was not led by individual families, but rather by institutional investors, defined as entities that have purchased at least five properties per year under the same name or under an incorporated name. So Fannie Mae marries Private Equity to make a powerful national landlord in the New Collectivist United Socialist States of Amerrka. It aint progress unless the march to feudal fascism is celebrated.

The conclusion was that institutional investors have been targeting specific markets and then accelerating purchases of REOs in those markets, driving down distressed inventories. Some effect has been seen in firmer REO home prices, and thus overall market upticks. Such organized investors have focused buying efforts strongly on Southern and Southwestern cities that were hit hardest by the foreclosure crisis. The states favored are Florida, Georgia, Arizona, Nevada, and California. The cities favored include Atlanta, Detroit, Las Vegas, Phoenix, Sacramento, and Riverside CA. The home price impact in cities without institutional buyers is less than half, 15% versus 6%. The metropolitan area that welcomed the most institutional activity in 2012 was Miami Florida, where firms are funding 30% of all sales. They accounted for 21% of all sales in Charlotte NC, for 19% in Las Vegas, and for 18% in Orlando FL. One could conclude that the housing market is stabilizing, and finding support. But the reason why is extremely disturbing. It is from the elite firms that caused the bust entering as carpetbaggers, to become the landlord for a significant slice of the national housing stock. Only in America can the biggest banks steal home equity, then become the landlord in a new feudal system.

Hedge funds and Private Equity Funds are the dominant buyer, who establish the price. Oftentimes, they crowd our first-time buyers from the housing market. Thus the distrubing trend, in elite landlord creation. The USGovt has its sponsored internal agency in Fannie Mae, which is working closely with the elite funds in tight Wall Street collusion. They are buying up huge numbers of single family houses, bidding at full price, crowding out the newly formed families (couples) seeking entry level homes. Wall Street wants to convert them into rental homes. One must wonder if the waves of Chinese will be the tenants. Take Jonathan Shidler, a realtor in California. He receives at least one phone call every day from a hedge fund manager who wants to buy single family houses, not a few but rather in bulk. The batches are being acquired like a financial instruments. Sometimes they come with residents, clearly in serious arrears on loan payments. A great emphasis is made on acquiring the homes from the bank inventory in the state of California. The brokers confide that when bids stream in, the institutional investor almost always wins.

Case in point is Blackstone, which is very activing making purchases in the Atlanta area. They have bought 1400 properties in Atlanta, some eligible for federal low income housing subsidies. They are the largest bulk purchaser within the new fledgling industry, homes for lease. The private equity firm has spent $4 billion on snagging 24,000 rental properties in the last year, permitting it the distinction of being the largest buyer in the United States. In the past twelve months, Blackstone has raised over $8 billion to buy up medium priced and low priced housing. The infamous criminal syndicate has a division also, as JPMorgan has started a fund to buy up to 5000 homes. Morgan Stanley has raised $1 billion to buy up to 10,000 homes. See the Before Its News article (CLICK HERE) and supporting articles (CLICK HERE and HERE).

## THANKS

Thanks to the following for charts StockCharts, Financial Times, UK Independent, Wall Street Journal, Zero Hedge, Business Insider, Calculated Risk, Shadow Govt Statistics, Market Watch, and more.